The trust game is a two player game with three stages, often used in economics exper- iments to measure trust and trustworthiness. Player 1 starts off with 10 Dollars. She can send an amoun0≤x≤ 10 to player 2. The experimenter triples the sent amount such that player 2 receives 3x. Player 2 can then send an amount 0 ≤ y ≤ 3r to player 1. (a) Draw a diagram of the extensive form of this game. (b) Find all the SPNE in the trust game. (c) Why is this game used to measure trust and trustworthiness? Do you think it provides reasonable measures? How would you interpret reciprocity in this game? How would you detect it? What is trust? Come up with a operational definition.

The trust game is a two player game with three stages, often used in economics exper- iments to measure trust and trustworthiness. Player 1 starts off with 10 Dollars. She can send an amoun0≤x≤ 10 to player 2. The experimenter triples the sent amount such that player 2 receives 3x. Player 2 can then send an amount 0 ≤ y ≤ 3r to player 1. (a) Draw a diagram of the extensive form of this game. (b) Find all the SPNE in the trust game. (c) Why is this game used to measure trust and trustworthiness? Do you think it provides reasonable measures? How would you interpret reciprocity in this game? How would you detect it? What is trust? Come up with a operational definition.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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