When equality trumps reciprocity

Erte Xiao, Christina Bicchieri

Research output: Contribution to journalArticleResearchpeer-review

38 Citations (Scopus)

Abstract

Inequity aversion and reciprocity have been identified as two primary motives underlying human decision-making. However, because income and wealth inequalities exist to some degree in all societies, these two key motives can point to different decisions. In particular, when a beneficiary is less wealthy than the benefactor, a reciprocal action can lead to greater inequality. In this paper, we report data from a trust game variant where trustees responses to kind intentions generate inequality in favor of investors. In relation to a standard trust game treatment where trustees responses reduce inequality, the proportion of non-reciprocating decisions is twice as large when reciprocity promotes inequality. Moreover, we find that investors expect that this will be the case. Overall, we find that a majority (more than half) of trustees do not reciprocate when reciprocity increases inequality that favors investors. Our results call attention to the potential importance of inequality in principal-agent relationships and have important implications for policies aimed at promoting trust and cooperation.
Original languageEnglish
Pages (from-to)456 - 470
Number of pages15
JournalJournal of Economic Psychology
Volume31
Publication statusPublished - 2010

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