Revenge and Gratitude in Trust-Based Encounters. Experimental Evidence on Process-Based Reciprocity

Abstract

Reciprocity is a fundamental behavioral principle: People are inclined to reward others’ kindness and to retaliate for others’ unkindness. Based on feelings of obligation or indignation and on a desire for self-consistency, the mere choice of an action can influence subsequent own and others’ decisions (i.e., without any change in objective outcomes). This can motivate sanctioning behavior and, thus, help enforce social norms. In this study, influences of behavioral advances on sanctioning behavior of trustors are investigated. For this purpose, an exploratory lab experiment has been conducted in which some trust situations involve options for trustors to announce sanctions or options for trustees to promise trustworthiness. Announcements are cheap-talk commitments; sanctions are costly and not always effective in objective terms. The experiment is designed as within-subject sets of structurally identical (sub)games resulting from kind and unkind actual behavior in single encounters. This design allows for control of effects of objective outcomes and of individual heterogeneity. It has been found that sanctioning behavior is strongly influenced by preceding behavior. Even cheap-talk announcements are powerful means to increase actual and costly rewarding and punishing decisions. Reward for kept promises of trustworthiness tends to be less likely than expected which offers further insights.

Keywords

Appendix A. Example of a Decision Screen in the Experiment

Figure A.1 shows an example of a decision screen of the H₁TGS in the experiment with $P_{1} = P_{2} = 50$, $R_{1} = R_{2} = 80$, $S_{1}^{{{\text{low}}}} = 20$, $T_{2}^{{{\text{low}}}} = 100$, $o_{1}^{{{\text{high}}}} = 10,$ $f_{2}^{{{\text{high}}}} = 15$, $g_{2}^{{{\text{low}}}} = 5$. It shows the decision situation of the trustee (role B) in which he chooses whether or not to honor trust after the trustor (role A) has placed trust combined with the message “If you choose up, I will choose down” (reward promise). The trustee can choose either “up” representing his decision to honor trust or “down” representing his decision to abuse trust. The active decision position (i.e., node in the game tree) was marked with a frame in yellow color. The participant’s own choice options, outcomes, and labels were displayed in red color and those of the other person in blue color. Parts of the table that were not reachable anymore due to the previous decisions made were changed into gray color. Moreover, the participant’s own outcomes were always displayed in the first column and those of the other person in the second column. The codebook provides details on experimental design, instructions and screen setup (Vieth 2008). The experiment was programmed using the software package “z-Tree” version 3 (Fischbacher 2007). The data were collected in April 2008 at CeDEx lab of the Nottingham School of Economics at Nottingham University.

Fig. A.1

Example of a decision screen in the experiment for the trustee’s choice of whether or not to honor trust after having received a reward promise in the H₁TGS.