Trust Building via Risk Taking: A Cross-Societal …people.ischool.berkeley.edu/~coye/Pubs/Articles/Trust...used a new variant of the prisonerÕs dilemma setting called a PD/D. In

The role of risk taking in building trustrelations has largely been overlooked in theburgeoning literature on trust in the socialsciences (Cook 2001 Hardin 2002) yet it iscentral to understanding how trust developsIn the absence of monitoring and the sanc-tioning of opportunistic behavior trustingalways involves some risk1 We define trust

building as the process through which socialinteraction opportunities involving risk aretransformed into trust relations in which thepeople involved come to trust each other andhonor that trust How does this happen

We argue that a series of risk-takingbehaviors is indispensable to building a trustrelation (Blau 1964 Holmes and Rempel1989) In a typical trust-building scenario twopeople realize that they can potentially gainfrom engaging in social exchange Theexchange may take the form of a date apleasant conversation or even a businesstransaction Each party knows that he or she

Social Psychology Quarterly2005 Vol 68 No 2 121ndash142

Trust Building via Risk TakingA Cross-Societal Experiment

KAREN S COOKStanford University

TOSHIO YAMAGISHIHokkaido University

COYE CHESHIREStanford University

ROBIN COOPERStanford University

MASAFUMI MATSUDAHokkaido University

RIE MASHIMAHokkaido University

The role of risk taking in building trust relations has largely been overlooked in theburgeoning literature on trust in the social sciences yet it is central to understandinghow trust develops We argue that a series of risk-taking behaviors is indispensable tobuilding a trust relation We conducted experiments in Japan and the United States toexamine the independent and cross-cultural effects of risk taking on trust building Theresults of these experiments indicate that the American participants took more risksthan did the Japanese supporting the general claim that Americans are inclined towardrisk taking and trust building Even so the Americans were no better than the Japaneseat improving the level of cooperation The cumulative results of these experimentsimply that risk taking is a critical element in trust building for Americans but less so forthe Japanese Our results show clearly that it is important to distinguish trusting behav-ior from cooperation and to measure them separately if we are to study trust and trustbuilding in relation to social cooperation

121

some settings the risk can simply be the risk of lossfrom an impersonal investment decision (as in Hseeand Weber 1999)

2193mdashSocial Psychology QuarterlymdashVOL 68 NO 2mdash68202-cook

Send Communications about this article toKaren S Cook Department of Sociology 450 SierraMall Building 120 Room 160 Stanford UniversityStanford CA 94305-2047 kcookstanfordedu

1 The risk involved can be either the standard risksin economic exchanges or social riskmdashthat is the riskof failing to locate a partner for exchange or of losingan exchange partner Our experimental setting opera-tionalizes the risk involved primarily in economicterms though social risk is involved because an actormust engage with another actor in order to profit In

Delivered by Ingenta to University of California Berkeley

Mon 27 Nov 2006 174358

122 SOCIAL PSYCHOLOGY QUARTERLY

will gain from an exchange with a potentialpartner if that partner turns out to be trust-worthy Yet there is always the risk of poten-tial loss if the partner is not

Typically there is no basis for expectingtrustworthy behavior from a new potentialexchange partner In addition in many situa-tions no regulatory agency exists to controlbehavior and there is little initial informationabout the reputations of possible exchangepartners Moreover monitoring and sanction-ing are usually too costly even in specific orga-nizational settings Under these conditions fewrational people would engage in exchangethus the benefits that could be obtained frommutual exchange are not realized

In situations containing the clear risk ofopportunism a trust relation in which oneperson can expect trustworthy behaviorfrom another becomes a highly valuablecommodity Such a relation is too valuableto jeopardize by engaging in the kind ofmyopic opportunistic behavior that gener-ates short-term gain but blocks the possibil-ity of building a long-term relationship Ifyou have a trustworthy friend or a businesspartner who reliably acts in a trustworthymanner you would not want to lose thatperson as an exchange partner This impliesthat a trust relation is self-sustaining in thesense that each person has an incentive tomaintain the relationship once it develops(Blau 1964 Hardin 2002) Unilaterallyuntrustworthy behavior in an exchange situ-ation destroys the opportunity to gain bene-fits that can only be generated throughmutual trust

A major obstacle to trust building howev-er is the initial lack of trust in onersquos potentialexchange partner One way to encourageanother to act in a trustworthy manner is toincrease onersquos own value to that personYet tomake oneself valuable to a potential partnerone somehow must invite that person to betrusting This situation is a classic ldquoCatch-22rdquoeach party must induce her or his partner to betrusting before actually proving her own trust-worthiness Therefore a unilateral act of trustby one partner involving risk taking2 is

required to break the deadlock of a mutuallack of trust

The key to success in breaking this dead-lock lies in the use of a GRIT (graduated rec-iprocation in tension reduction) strategy as ithas been called in the conflict literatureOsgood (1962) proposed GRIT as an effec-tive methodology for mutual disarmamentduring the cold war as well as for other con-flict situations involving risk He proposedthat the series of moves aimed at eliminatingtensions must be both graduated and recipro-cated A player starts with a unilateral yetlow-risk move to alleviate tension and thenwaits until his partner reciprocates thatmoveWhen it is reciprocated the next initia-tive for alleviating tension involves a littlemore risk According to Etzioni (1967 1969)this strategy led to success in the ldquoKennedyExperimentrdquo which took place between June10 and November 22 1963 in reducing ten-sion between the United States and theSoviet Union during the Cuban missile crisis

Without actual knowledge of the GRITstrategy the most successful participants(those who earned the most) in Matsuda andYamagishirsquos (2001) recent experiment usedbasically a GRIT-type strategy in buildingtrust with their partners Initially they coop-erated unilaterally entrusting only a smallamount to the partner then they increasedthe amount over time as the partner demon-strated her or his trustworthiness A relative-ly high level of mutual cooperation wasachieved in this study in which participantsused a new variant of the prisonerrsquos dilemmasetting called a PDD In this setting in con-trast to the standard one-shot prisonerrsquosdilemma or other repeated PD experimentsthe participants can lower the stakes involvedand minimize their initial risk (the amountthey entrust) without compromising theirown willingness to cooperate until a trustrelationship has formed

In the ordinary repeated prisonerrsquosdilemma (PD) this strategy is not possiblebecause the choice of cooperation or defec-tion may reflect either trust (or lack of it) orwillingness (or unwillingness) to cooperateThose who are afraid that their partner willnot cooperate often refuse to cooperate evenwhen they might be willing to cooperate withsomeone they assume might be generally


2 This is the same risk as is involved in the firstmove in reciprocal exchange (see Molm and Cook1995 Molm Petersen and Takahashi 2001)


Mon 27 Nov 2006 174358

TRUST BUILDING 123

cooperative (Arneson 1982 Pruitt andKimmel 1977) Those who do not trust theirpartners and want to avoid being exploitedby their partners have no choice other thandefection typically this generates a spiral ofmutual noncooperation In the new experi-mental setting (PDD) however one cancontinue to cooperate as did many of theparticipants in Matsuda and Yamagishirsquos(2001) experiment even when they did nottrust their partner on a specific trial Insteadthey reduced the amount at stake signaling areduction in trust In short the major obsta-cle to trust buildingmdashthe deadlock involvedin a mutual lack of trustmdashcan be overcomeby engaging in a series of graduated and reci-procated risk-taking opportunities

Trust Building Among Americans andJapanese Uncertainty Avoidance

The argument that trust buildingrequires risk taking implies that those whoare risk-averse or bothered by high levels ofuncertainty may find it difficult to enter trustrelationships They may prefer more formalcommitment mechanisms (what Yamagishicalls ldquoassurance structuresrdquo) as a means ofavoiding the risk of exploitation or the uncer-tainty of not finding an exchange partnerOur decision to examine trust building in theUnited States and Japan is based on ourknowledge that Americans and Japanese arereported to differ greatly in their orientationsto risk taking Japanese generally are moreconcerned about avoiding uncertainty andrisk than are Americans some Americanseven prefer to seek risks If this is so wewould expect to observe a significant differ-ence between Americans and Japanese in theprocess of trust buildingThat is the large cul-tural difference in their tendencies to avoiduncertainty should be reflected in theirbehavior in exchange situations

For example Americans have beenshown in survey research to have a higherlevel of general trust3 than the Japanese

(Hayashi et al 1982 Yamagishi andYamagishi 1994) Furthermore Americansare more cooperative than Japanese in N-person PDs in the absence of opportunitiesto sanction defectors (Yamagishi 1988) Moregenerally the current findings on the role ofrisk taking in building trust among Americanand Japanese participants are consistent withYamagishi and his colleaguesrsquo characteriza-tion of Japanese social relations primarily asassurance relations rather than as trust rela-tions in contrast to the results for Americans(Yamagishi 1998 Yamagishi Cook andWatabe 1998 Yamagishi and Yamagishi1994)

In a cross-cultural examination of work-related values Hofstede (1980 also seeTriandis 1993) shows that the United Statesand Japan differ on their levels of uncertain-ty avoidance and on their place on the con-tinuum from individualism to collectivism Ina list of 40 modern countries the UnitedStates registers the highest individualismscore (91) whereas Japan (46) is near themiddle The situation is reversed howeverfor uncertainty avoidance with controls forthe age of those surveyed Japan emergesnear the top of the list (112) while the UnitedStates is closer to the bottom (36) Althoughthe United States and Japan differ on bothscales they are differentiated especially ontheir levels of uncertainty avoidanceThis dif-ference in orientations to risk suggests thatthe Japanese are more likely than Americansto prefer a social interaction situation inwhich the level of social uncertainty involvedis lower (but see Buchan Croson and Dawes2002)4


3 General trust is measured using survey items suchas ldquoGenerally speaking would you say that most peo-ple can be trusted or that you canrsquot be too carefuldealing with peoplerdquo Some authors (eg Hardin2002) argue that these items measure lack of cynicismor a general sense of optimism in dealing with others

rather than anything we would call trust in a relation-al sense Although we agree in general with this criti-cism we use the term general trust here instead ofoptimism because it has been employed so widely inthe trust literature to refer to generalized orientationstoward trusting especially in cross-national studiesLevi and Stoker (2000) among others offer addition-al criticisms of the standard survey items on trust

4 Recent research comparing risk preferences inthe United States and China (Hsee and Weber 1999Weber Hsee and Solowska 1998) also indicates cul-tural differences in risk seeking related to individual-ism and collectivism Although researchers both inthe United States and in China predicted thatAmericans would be more inclined to seek risks theresults suggest that the Chinese actually are morerisk-seeking than Americans but only in regard to


Mon 27 Nov 2006 174358


One strategy for reducing social uncer-tainty in exchange situations is to form com-mitted relations with particular partners Inthis context commitment is primarily amechanism for avoiding uncertainty (seeKollock 1994) One continues to engage inexchange with one partner to the exclusionof others even in the face of more profitablealternatives Although Americans may formcommitments when uncertainty and risk arehigh they try to avoid doing so if they canInstead they may be more willing early inexchange relationships to take the type oflow-level risks that enable trust buildingThe differences in Japanese and Americanpsychological orientations may be reflectedin exchange behavior at varying levels ofuncertainty and risk We investigate thesebehavioral differences in our experiment

Kollock (1994) provides a clear accountof commitment formation as uncertaintyavoidance Those high in uncertainty avoid-ance will be more in need of assurancemechanisms and thus more likely to formcommitted relations in high uncertainty(Yamagishi et al 1998) Kollock comparestwo commodity markets in southeast Asiathe rubber market and the rice market andargues that the level of social uncertainty orrisk of default involved in the trade of rice isquite different from that for raw rubber Thequality of rice is immediately apparent uponsimple inspection thus the rice buyer faceslittle risk of being cheated on quality In con-trast the quality of raw rubber can beknown only after it has been processedThus cheating on quality in the trade of rawrubber is easier and the consequences ofbeing cheated are extremely damaging tothe buyer If the rubber is bad it will beworth less than the price paid for it The dif-ference in social uncertainty and in the riskinvolved in the trades of these commoditiesKollock argues explains the observed differ-ence in the dominant form of trade Rice isusually traded at open markets between

strangers whereas rubber is usually tradedbetween particular producers and brokerswho form long-term relationships oftenthese extend over several generations with-in families (also see Farrell 2004)

This general argument implies that trustbuilding via risk taking as a means of deal-ing with social uncertainty is preferred morestrongly by Americans than by Japanesewhereas commitment formation as a mecha-nism for uncertainty avoidance5 is preferredmore strongly by the Japanese Several linesof research support this claim First we findevidence in a cross-societal experiment ofelementary and instrumental cooperation insocial dilemmas (Yamagishi 1988) BothAmerican and Japanese participants in thisexperiment played a repeated social dilem-ma game In one condition they had anadditional choice establishing a sanctioningsystem that punished noncooperators Suchan opportunity was not provided in the con-trol condition The results demonstratedthat Americans were more cooperative inthe absence of a sanctioning system that dis-ciplines membersrsquo behavior whereas theJapanese were more willing to contribute tothe establishment of such a systemFurthermore the opportunity to establish asanctioning system improved the coopera-tion levels of the Japanese participants morestrongly than that of the Americans

An implication of this experiment rele-vant to the current study is that the Japaneseare less willing than the Americans toengage in cooperative behavior in theabsence of an assurance system that reducessocial uncertainty and are more willing toengage in behavior that reduces such uncer-tainty In another cross-societal studyresearchers compared how levels of generaltrust affect American and Japanese subjectsrsquotendency to form commitment relations(Yamagishi et al 1998) The results of twoexperiments provide strong evidence for theargument that distinguishes between com-


investments not in the social domain Hsee andWeber speculate that this may be the case because theChinese live in a collectivist culture where family andfriends would provide a ldquocushionrdquo in the event of aneed for financial resources Further research is need-ed to fully explore the factors that contribute to suchcross-cultural differences

5 We examine the behavioral consequences of risktaking for trust building but lack a direct measure ofuncertainty avoidance In future research we plan todevelop such a measure to directly assess the assump-tion that uncertainty avoidance mediates the effectswe observe in our experiment


Mon 27 Nov 2006 174358

TRUST BUILDING 125

mitment formation as uncertainty avoid-ance and trust as risk taking High trustersmdashthose who showed a high level of generaltrust in their responses on a trust scalemdashareless likely than low trusters to form commit-ments when faced with a socially uncertainsituation (Yamagishi et al 1998)

The results of these experiments pro-vide evidence that in an uncertain situationthose who prefer to form a commitmentrelation with a particular partner and thusreduce the risks within such a relation areless trustful of other people in general Thesame finding concerning the effect of gener-al trust on commitment formation wasobtained with both American and Japaneseparticipants those low in general trust ofothers in both societies are more likely toform commitment relations with trustwor-thy persons despite the opportunity costinvolved The predicted difference in ourexperiment between the Japanese and theAmericans reflects not only relative levelsof uncertainty avoidance but also differentlevels of general trust typically the latterare higher in the United States than inJapan

In the experiment reported below weprovide an empirical test of our argumentthat trust building requires risk taking Totest our argument we first compare twotypes of experimental games the standardprisonerrsquos dilemma (PD) game and thenewer prisonerrsquos dilemma game with vari-able levels of dependence (PDD) In theremainder of this paper we will refer to thePDD game as the PDR game (prisonerrsquosdilemma game with risk) The PDR game isan exact replica of what was called thePDD6 game in previous research (egMatsuda and Yamagishi 2001) Yet becausewe focus here on risk taking we refer to thisgame as the PDR game In addition we testour argument that trust building requiresrisk taking by comparing the levels of trustand cooperation exhibited by American andJapanese participants

Prisonerrsquos Dilemma With Risk A NewExperimental Paradigm

To study trust researchers first used astandard prisonerrsquos dilemma (PD) paradigminitially designed for experiments on cooper-ation These researchers simply used cooper-ative behavior in the PD game as an indicatorof trust (eg Deutsch 1973 Lindskold 1978Meeker 1983 Pilisuk and Skolnick 1968Solomon 1960) Because the PD game wasdesigned to study cooperation not trust thismove confounded measures of trust andcooperation If the role of trust is to ease theway to cooperation treating cooperativebehavior as a measure of trust would havemade the experimental evidence circularDoes trust lead people to cooperate or doescooperation lead people to trust one anoth-er We cannot determine the answer to thisquestion from much of the existing experi-mental evidence Furthermore factors otherthan trust are known to affect rates of coop-eration in the PD thus the interpretation ofcooperation as a direct expression of trust isdubious

Modifications of the standard PD proto-col subsequently were designed to generatedistinct behavioral measures of trust andcooperation7 One modification is nowknown as the ldquotrust gamerdquo (TG) or theldquotrust-honor gamerdquo (Dasgupta 1988 Kreps1990 Snijders 1996)The trust game is similarto a PD in that individually rational choicesby two players lead them to a Pareto defi-cient outcomeThe TG is different from a PDhowever in that trusting behavior is clearlydistinct from cooperative behavior This sig-nificant difference between the PD and theTG is important for studying trust and thedevelopment of trust relations

The element critically lacking in a stan-dard PD game as a means of studying trust iswhat constitutes the core of an act of trust or


7 One of the first efforts to disentangle measures oftrust and cooperation was an experimental study byOrbell and Dawes (1993) In their revision to the stan-dard PD game subjects were allowed an exit optionthey could choose not to play at all Those whoremained in the game were described as displayingtrust The shortcoming of this design is that it allowedonly a dichotomous measure of trust not a continu-ous measure

6 For an earlier variant see Kakiuchi and Yamagishi(1997) and Yamagishi and Kakiuchi (2000)


Mon 27 Nov 2006 174358


trusting behavior taking risks and thus mak-ing oneself vulnerable In a trust game player1rsquos choice to behave in a trusting manner isan act of putting her or his fate in the handsof another player to achieve an outcome bet-ter than the status quo In a standard trustgame for example player 1 chooses whetheror not to trust player 2 and player 2 chooseswhether to honor player 1rsquos trustWhen play-er 1 chooses not to trust player 2 both play-ers receive a small benefit ($10) To achievethe greater benefit of $20 each howeverplayer 1 must take the risk of potentiallyreceiving a less desirable outcome ($0) ifplayer 2 does not honor her trust Player 2clearly has an incentive not to honor player1rsquos trust because when she does not do so shereceives more ($30) than if she does so (only$20) In this case once player 1 has chosen totake a risk by acting in a trusting manner herfate is transferred entirely to the hands ofplayer 2 Whether this act of ldquotrustrdquo engen-ders a more or a less desirable outcome thannot trusting depends on player 2rsquos action Ifplayer 2 is ldquofairrdquo and trustworthy and honorsplayer 1rsquos trust then ldquotrustingrdquo is certainlybetter for player 1 otherwise not ldquotrustingrdquo isclearly the best choice

In sharp contrast in the PD game defec-tion is always superior to cooperationmdashthatis it provides a more desirable outcomemdashnomatter what onersquos partner does Whetherplayer 2 cooperates or defects does not affectthe benefit player 1 earns from defectingrather than from cooperating In game-theo-retic terms defection is the dominant behav-ioral choice for each player in the PD In thegame of trust however there is no dominantchoice for player 1 the outcome dependssolely on whether or not player 2 cooper-ates8

Although TG succeeds in capturing thecritical elements involved in trust and coop-eration it suffers from two significant limita-tions it is static and one-sided (orasymmetric) The first limitation recently hasbeen removed as researchers have begun to

use a repeated TG rather than the one-shotTG for the study of trust relations For exam-ple Bolton Katok and Ockenfels (2003)study the development (or more preciselythe maintenance) of trust and trustworthi-ness by letting the same two subjects play atrust game repeatedly with one anotherTheyalso resolve the second major problem withthe TG by letting the players alternatebetween the roles of truster and cooperatorduring the experiment

Another popular variant of the trustgame found in experimental economics isthe investment game (IG) developed byBerg Dickhaut and McCabe (1995) The IGis played between two playersA and BAs inthe trust game player A decides to trust ornot to trust B and B decides to honor Arsquostrust or not in response The differencebetween the TG and the IG is in the nature ofthe choices for actors A and B In the TGboth A and B make binary choices Abetween trusting and not trusting B betweenhonoring and not honoring Arsquos trust In theIG they make continuous rather than binarychoices player A decides how much trust(indicated by level of investment) he or shewill place in B and player B decides howmuch to reciprocate the trust placed in himor her by A Berg et al (1995) provided A andB with an endowment of $10 each and askedA to transfer to B any amount up to $10 Theexperimenter tripled the amount of moneytransferred to B If for example A trans-ferred $4 to B B received $12 Player B whoreceived the transferred (and tripled) moneyin addition to her or his initial endowment of$10 then decided whether to send some or allof the money back to AThe IG thus capturesthe same elements of trust and cooperationas the TG with the additional benefit ofallowing the researcher to study varying lev-els of trust and cooperation Berg et al (1995)use the IG in a static and one-sided mannerhowever it has not been employed to studythe development of mutual trust and cooper-ation between the same two partners ThePDR we introduce here can be regarded as amutual and repeated version of a variant ofthe investment game It enables us to studythe emergence of mutual trust between thesame pair of players


8 According to the logic of backward inductionused by game theorists however ldquorationalrdquo player 1should not trust because ldquorationalrdquo player 2 is expect-ed not to honor her or his trust


Mon 27 Nov 2006 174358

TRUST BUILDING 127

Like the typical trust game PDR allowsus to separately measure both trust and coop-eration behaviorally The magnitude of thestake a player chooses is a direct reflection ofher or his level of trust in her partner Thisdecision is clearly distinct from the act ofcooperation versus defection At the sametime the decisions in this game are symmetri-calThe PDR game thus is better suited thanthe ordinary PD for studying trust formationin dyadic relations or networks of dyads

We elaborate on the details of the PDRgame9 in the section on procedures but thefollowing is a brief overview of the gamersquosstructure In the beginning of each game (ortrial) in the PDR two players each are given10 coins and are asked to decide how many ofthe coins (from one to 10) they want toentrust to their partner The players makethis decision simultaneously Next theyreceive information on the number of coinsentrusted to them by their partner Eachplayer then decides whether or not to returnthe coins entrusted to him or her When aplayer returns the coins the partner receivesdouble the number she entrusted When aplayer does not return the coins they become

her gain and her partnerrsquos loss The numberof coins entrusted to a partner is the measureof the level of the playerrsquos trust in her part-ner while the decision whether to return thecoins entrusted to her is the measure of coop-eration10 The PDR game allows us to dis-tinguish behavioral measures of trust frombehavioral measures of cooperation as wellas to examine reciprocal trust

The Development of Trust Relations

The goal of this experimental study is toinvestigate the role of risk taking in thedevelopment of a trust relationshipmdasha rela-tionship in which two players both trust andcooperate at a high level We aim to achievethis goal by comparing the cooperation levelsin a standard PD game with those in thePDR game described briefly aboveAlthough both the PD game and the PDRgame involve entrusting coins to a partnerthere is an important difference

In the PD game the number of coins toentrust is determined randomly the playerhas no choice In that game the playerrsquos onlychoice is whether or not to return the coinsthat were entrusted to him or her Figure 1depicts how the PD game we use constitutesa prisonerrsquos dilemma


Figure 1 An Example of the Prisonerrsquos Dilemma Game Used in the StudyNote In this example each player is randomly assigned to ldquoentrustrdquo five coins to her or his partner Each play-er has only a choice of returning or not returning the five coins entrusted by the partner When the coins arereturned the number of coins doubles

Player 2rsquos Choice

Player 1rsquos Choice Return Not Return

Return

Not Return

10 15

10 0

0 5

15 5

9 The initial PDR game was presented to the sub-jects in matrix form but this was too complex formany players to fully comprehend To alleviate suchdifficulties Matsuda and Yamagishi (2001) introduceda new version of PDR that retained all the relevantfeatures of the original PDR while making the gameintuitively easier to understand

10 Again we elaborate this point more fully in thesection on procedures when we discuss each condi-tion (and each phase in each condition)


Mon 27 Nov 2006 174358


In contrast in the PDR game each play-er can choose not only whether or not toreturn the coins that were entrusted to herbut also how many coins she wishes toentrust to her partner The main differencebetween the two games is whether risk taking(whether to entrust a large number of coins)to build trust can take place (See Figure 2) Inthe PD game the player cannot take risks inthe PDR game the player can take a risk indeciding how many coins to entrust By com-paring the cooperation rates between the twogamesmdashthat is the proportions of the choicesto return versus not to return the coinsmdashwecan examine whether giving people theopportunity to take a risk and to trust anoth-er (by entrusting a large number of coins)helps to develop a trust relationship

We have argued that in some exchangesituations risk taking enhances cooperationHere we examine whether this effect is morepronounced among American than amongJapanese participants Given the findingsdemonstrating a risk-avoidance tendencyamong the Japanese and Hofstedersquos (1991)finding that the Japanese are generally high-er than Americans in uncertainty avoidancewe expect the Americans to engage in moretrusting behaviormdashthat is to entrust morecoinsmdashthan the Japanese

We further investigate whether thedevelopment of trust relations will be facili-tated by risk taking when a ldquoshadow of thefuturerdquo (Axelrod 1984) is present comparedwith a situation when no such shadow of thefuture existsTo do this we compare the levelsof trust (the number of coins players entrustto their partners) and cooperation (thereturn rate) in a fixed-partner game as com-pared with a random-partner game In thefixed-partner game the same two playersplay either the PD game or the PDR game

repeatedly In such a game it is possible togradually increase the level of risk taking andtrustworthy responses within a relationshipIn the random-partner game each playerencounters a new partner each time andplays the PDR game with that partnerFurthermore players are not informed of theidentity of their current exchange partnerThus in the random-partner game it is notpossible to gradually build a trust relation-ship with a specific person therefore noldquoshadow of the futurerdquo is present

Because trust building with a particularperson is impossible in the random-partnerPDR it is doubtful that acting in a trustingmanner could improve cooperation rates inthis condition There is one reason howeverto expect a higher level of cooperation inPDR than in PD even in the random-partnersituation namely the signaling role of trust-ing behavior That is by acting in a trustingmanner a player can signal her or his inten-tion to cooperate11

The prisonerrsquos dilemma and social dilem-ma literature on cooperation and defectionconsistently indicates that the choice to coop-erate or defect is grounded in two distinctpsychological states greed and fear On theone hand those who care only about theirown welfare and who are greedy usuallydefect in one-shot games On the other evennot-so-greedy people who probably wouldprefer to cooperate rather than to defect willdefect anyway because they expect that oth-ers will be unwilling to cooperate In otherwords they defect because of a fear of beingexploited not because of greed (See Pruitt


Figure 2 Prisonerrsquos Dilemma with Risk (PDR) for Player ANote Player A chooses to increase or decrease her or his dependence on B

11 In our design acting in a trusting way is mea-sured by the number of coins a player entrusts to hisor her partner More specifically acting in a trustingway is what we call risk taking


Mon 27 Nov 2006 174358

TRUST BUILDING 129

and Kimmel 1977 Yamagishi and Sato 1986)In addition to the fear that others will begreedy a ldquosecond-orderrdquo fear may existnamely that others will be similarly fearfuland thus may defect for the same reasonTrusting behavior can alleviate this ldquosecond-orderrdquo fear Acting in a trusting manner(entrusting coins risk taking) signals that aplayer is not afraid his or her partner willdefect This action may eliminate the second-order fear in the partner

Because second-order fear has not beenstudied until now we cannot determine inadvance its importance in determining thelevel of cooperation Tentatively we expectthis effect of signaling in reducing second-order fear to be relatively weak at best Thecomparison between the fixed-partner andthe random-partner PDR game allows us toexamine whether the positive effect of actingin a trusting manner on cooperation rates inthe PDR game is due to trust building initself or to a simple signaling effect12

We also investigate whether the partici-pantrsquos nationalitymdashAmerican or Japanesemdashmakes a difference even in random partnerexchange in which participants interact witha randomly matched partner on every trialWe address whether a greater willingness toact in a trusting manner as expected morestrongly of the American participants thanthe Japanese produces greater cooperationin the random-partner PDR

THE EXPERIMENT

Participants

Potential Japanese participants wererecruited by telephone from a pool of first-year undergraduates enrolled at HokkaidoUniversityA total of 192 participants includ-ing 115 males and 77 females were selectedand scheduled by phone to participateAmerican participants were recruited in an

email message distributed to undergraduatesliving on campus at Stanford University Themessage directed interested students to awebsite where they completed a recruitmentform on line We selected 106 participants 56males and 50 females and scheduled themaccording to their availability

Overview of the Experiment

Four six or eight participants werescheduled to arrive at the laboratory at a par-ticular timeThe scheduler also assigned eachsubject a separate waiting room and told himor her to wait there for an experimenterThusparticipants were unable to see or talk withone another while they waited13 Wheneveryone had arrived each was taken sepa-rately to a workstation consisting of a smallroom with a chair a desk and a desktop com-puter14 Participants were given a consentform to read and sign They used only thecomputer during the experiment and couldcall the experimenter via a help command ifnecessary The computer software originallydeveloped by Matsuda and Yamagishi (2001)was used in both countries with translationfrom a Japanese display to an English displayfor the experiment in the United States

Once the experimenter (located in thecontrol room) started the program from thehost computer the participants were told toread and follow the instructions as theyappeared on the screen They were informedthat (1) there were other participants (2)they would be divided into pairs on each trialand would make decisions concerningexchanges with their partners (3) they wouldbe paid in accordance with the number ofcoins they acquired from each exchange and(4) they would not know with whom theywere exchanging but they would knowwhether it was a new randomly selected part-


12 As one reviewer notes aptly rather than fearingthat my partner will defect I may simply prefer totake a risk A signaling effect does not distinguishbetween these two possibilities The present analysisas we stated is simply exploratory More direct mea-sures would be required to assess the possible role offear reduction versus simple risk taking the mainfocus of this experimental investigation

13 A different procedure for scheduling the partici-pantsrsquo arrival was used in the Japanese study with thesame effect they were not allowed to see each other

14 In the American version one room held two par-ticipants at the same time These two workstationshowever were separated by a partition and partici-pants were brought in separately such that they couldnot see one another In addition the experimentermonitored these rooms closely so that they would nottalk with one another


Mon 27 Nov 2006 174358


ner or the same partner as in the previoustrial (depending on condition)

Each participant was paired randomlywith a new partner during each of the first 25trials and then for the remaining trials waspaired with the same partner (on the basis ofcooperation rates) or with different partnersdepending on the experiment conditionAfter the experiment each participant com-pleted a short computerized questionnaireand was compensated according to the out-come of the experiment

The unit of exchange in the computerprogram was called a ldquocoinrdquo At the end ofthe study each coin the participants accumu-lated during the experiment was convertedinto cash worth 2 cents Participants earnedabout $19 on average with a minimum of $9and a maximum of $28 The experiment tookan average of 50 minutes to complete includ-ing the post experimental questionnaire Theparticipants were debriefed at the computerbefore payment and then were dismissedseparately so that they would not see eachother

Procedure Summary

The experiment included three condi-tions PD with a fixed partner PDR with afixed partner and PDR with a random part-ner Each condition had two phases Table 1presents a description of each phase in eachof the three conditions

Phase I

In Phase I the participants engaged in astandard PD game and were matched withnew random partners on every trial Phase Iwas exactly the same for all conditions Itincluded the first 24 trials in the fixed-partnercondition in Japan and the first 25 trials in therandom-partner condition in Japan as well asall of the conditions in the United States15

Because players do not have the option to

determine how many coins they wish toentrust in the standard PD game only coop-eration rates (return = cooperate do notreturn = defect) were measured in Phase IAtthe end of Phase I we informed each partici-pant of her or his accumulated profit as wellas the amount of the highest profit obtainedin the entire group

We included the first phase in the designof the experiment for two reasons First weneeded to measure each individualrsquos baserate for her or his general cooperative ten-dency The random-matching feature ofPhase I prevented participants from engag-ing in strategic behavior such as tit-for-tataimed at enhancing long-term profitsThat isparticipants played one-shot PDs repeatedlyrather than an iterated PD Thus Phase I didnot include the ldquoshadow of the futurerdquo(Axelrod 1984) which often leads a fixed pairwho repeatedly play the same PD game toengage in mutual cooperation The level ofcooperation obtained in Phase I shouldreflect fairly accurately the participantsrsquo gen-eral cooperative tendencies

The second reason why we introducedPhase I was that we expected the partici-pantsrsquo mutual cooperation to be low duringPhase I because of the lack of any ldquoshadow ofthe futurerdquo This experience then would pro-vide a strong motivational basis for buildingtrust relations in Phase II (see Pruitt andKimmel 1977)

Does cooperation in the PDR improveamong the initially low cooperators or theinitially high cooperators in the study Onthe one hand initial cooperation may be lowbecause players have not been given theopportunity to trust their partners indepen-dent of the choice to cooperate or defectThus when they receive the option of deter-mining how much to trust their partners theiroverall level of cooperation should improvedramatically On the other hand the initiallylow cooperators may be general distrusterswho have low expectations regarding otherpeoplersquos trustworthiness at the same timethey may not be willing to learn from experi-ence If this is the case low initial cooperators


15 Although the number of trials was slightly differ-ent in Japan and in the United States we have no rea-son to believe that this slight difference accounts forany discrepancies between the results obtained in thetwo countries The Japanese data were collected firstand each experimental session took about an hour Inthe United States the experimental sessions were

conducted much more rapidly with the same numberof trials so the number of trials was increased slightly


Mon 27 Nov 2006 174358

TRUST BUILDING 131

may be unwilling to take risks to break thedeadlock of a mutual lack of trust Thenagain because these two factors operatesimultaneously the effects may cancel eachother out

At this stage we have no specific empiri-cal or theoretical basis for making a particu-lar prediction about these three possibleoutcomes The results of the current experi-ment will provide a valuable basis for furthertheoretical development concerning thisquestion Thus we return to these issues afterour discussion of the experimental results

Phase II

In Phase II participants engaged ineither a PD with a fixed partner (condition1) a PDR game with a fixed partner (condi-tion 2) or a PDR game with a random part-ner (condition 3) Phase II included theremaining 36 trials in the fixed-partner con-dition in Japan and the remaining 45 trials inthe random partner condition in Japan aswell as all of the conditions in the UnitedStates

Condition 1 PD with fixed-partnerexchange In condition 1 Phase II trials con-sisted of the same PD game as the subjectsplayed in Phase I The only differencebetween Phase I and Phase II in condition 1was that partners were random on each trialin Phase I while partners remained the sameon each trial in Phase II In both phases par-ticipants were unable to choose the amountthey wished to entrust to their partners the

computer determined this amount randomlyThus only cooperation rates (how often play-ers returned the entrusted coins) were mea-sured

Condition 2 PDR with fixed partnerexchange In condition 2 at the end of PhaseI participants were told that they would havethe same partners for the remainder of theexperiment We placed subjects in pairs bymatching their cooperation rates16 fromPhase I although we did not tell them so Inaddition in Phase I the subjects played thePDR game instead of the standard PDgame thus they were allowed to choose thenumber of coins they wished to entrust totheir partner on each trial

We gave participants 10 coins on eachtrial and they decided how many coins (fromone to 10) to entrust to their partnersParticipants then decided whether toldquoreturnrdquo or to ldquokeeprdquo the coins entrusted tothem by their partnersWhen they decided toreturn them we doubled the number of coinsand gave that number to their partnersWhenplayers decided to keep the coins they keptexactly the number of coins entrusted tothem that is the coins were not doubledWhile the players were deciding whether toreturn or to keep the coins entrusted to themby their partners their partners were making


Table 1 Description of Phases in Each Experimental Condition

Phase I Phase II

(24 Trials in Japan (36 Trials in JapanCondition 25 Trials in US) 50 Trials in US)

PDmdashFixed Partner Random partner on every trial Fixed partner on every trialmdash(Condition 1) Cannot control the amount to entrust to Cannot control the amount to entrust to

partner partnerPDRmdashFixed Partner Random partner on every trial Fixed partner on every trialmdash(Condition 2) Cannot control the amount to entrust to Can control the amount to entrust to

partner partnerPDRmdashRandom Partner Random partner on every trial Random partner on every trialmdash(Condition 3) Cannot control the amount to entrust to Can control the amount to entrust to

partner partner

16 Matching on cooperation rates eliminates thepotential confounding of differential cooperative ten-dencies between partners (or more precisely differ-ences in their degree of optimism in their assessmentsof othersrsquo cooperativeness)


Mon 27 Nov 2006 174358


the same decision At the end of each trialparticipants learned whether their partnershad returned the coins entrusted to them

Condition 3 PDR with random partnerexchange In condition 3 the Phase II trialsconsisted of the PDR game with a randompartner Thus although participants wereable to control the number of coins to entrustto their partner on each trial they could notuse this ability to build a relationship with asingle partner because they always received anew randomly assigned partner after eachtrial

In sum the three experimental condi-tions were identical during Phase I In PhaseII either participants could not controlentrusting behavior and had a fixed partner(condition 1 PD-fixed) they could controlentrusting behavior and had a fixed partner(condition 2 PDR-fixed) or they could con-trol entrusting behavior but had a randomlyassigned partner (condition 3 PDR-ran-dom)

Rules of the game acquiring profits (allconditions) Participants in every conditionacquired profits on each trial in the sameway First they kept the coins they did notentrust to their partners Second they keptthe coins their partners entrusted to them ifthey decided not to return those coinsThird they received double the number ofcoins their partners returned to themParticipants were not allowed to use thisprofit on subsequent trials however at thebeginning of each trial they received 10 newcoins for exchange Depending on theexperimental condition either the partici-pants decided simultaneously how manycoins to entrust (PDR) or the computerdecided this amount randomly (standardPD) In all conditions however participantsdecided whether to return or to keep theentrusted coins The computer displayed thenumber of total coins acquired by each per-son privately but not those acquired byothers

The more coins participants entrusted totheir partners the more profit they receivedif their partners returned them If their part-ners did not return them however the morecoins they entrusted the more they lostSuppose a participant entrusts nine of her 10coins to her partner If the partner returns

them the participant receives 18 coins for atotal of 19 If the partner chooses not toreturn them however she loses them andends up with only one remaining coin If aparticipant is afraid that her partner mightnot return the coins she has entrusted shemay choose instead to entrust only one cointo her partner Even if her partner returnsthat coin the participant receives only twocoins and thus ends up with 11 (two plus theremaining nine) Therefore the more coins aparticipant entrusts the greater the potentialgain (when the partner returns them) and thepotential loss (when the partner does notreturn them)

If a participant is allowed to control thenumber of coins to entrust to her partnerthen the number she chooses to entrust is adirect reflection of her trust in her partnerTrust thus is measured as the number of coinsthe participant entrusts to the partnerCooperation is measured by the decision asto whether to return or to keep the coinsentrusted by the partner to the participantTo return them is to cooperate to keep themis to defect

Hypotheses

Our general theoretical argument sug-gests first that allowing risk taking to play arole helps to build mutually cooperative rela-tionships and second that in building suchrelationships risk taking in order to createtrust should be more pronounced amongAmericans than among the Japanese

The first hypothesis in this study con-cerns the effect of taking risks as an act oftrust in improving cooperationThis hypothe-sis involves the comparison between thefixed-partner PD and the fixed-partner PDRconditions The standard PD allows partici-pants only to choose whether or not to coop-erate In the PDR players can choose theamount they are willing to entrust to theirpartners on each trial before decidingwhether to cooperateWe expect higher ratesof cooperation in the PDR than in the PDcondition as a result

Hypothesis 1 Both American and Japaneseparticipants will cooperate at a higher level inthe fixed-partner PDR (condition 2) than inthe fixed-partner PD setting (condition 1)



Mon 27 Nov 2006 174358

TRUST BUILDING 133

On the basis of previous findings con-cerning differential levels of uncertaintyavoidance and commitment formationamong Americans and Japanese we predictthat American participants will take largerrisks to initiate trust relations (as reflected intheir willingness to entrust a larger amount ofmoney to their partners) than will Japaneseparticipants

Hypothesis 2 American participants willexhibit a higher level of trusting behaviorthan Japanese participants in both the fixed-partner PDR (condition 2) and the random-partner PDR (condition 3)

American participantsrsquo greater willing-ness to take risks and to trust their partnerswill lead to a higher level of mutual coopera-tion in the fixed-partner PDR in whichbuilding trust relationships between particu-lar partners is possible Although the sameeffect may occur in the random-partnerPDR condition it should reflect only gener-al cross-national tendencies toward uncer-tainty avoidance because the partners changeon every trial

Hypothesis 3 The positive effect of risk tak-ing on cooperation rates predicted inHypothesis 1 will be more pronouncedamong American than Japanese participants

The next hypothesis addresses whetherrisk taking enhances cooperation even with-out a ldquoshadow of the futurerdquo Without thepossibility of building a trust relationshipbetween a particular pair of partners taking arisk and trusting onersquos partner may not exertmuch effect on cooperation In contrastwhen one has the option of choosing howmuch to entrust to onersquos partner beforedeciding whether to cooperate it is possibleto use trusting behavior as a signal to conveyonersquos willingness to cooperate This optionmay reduce the partnerrsquos possible second-order fear of exploitation or it may simplysignal willingness to take a risk on the part-nerThus we predict that the positive effect ofchoosing the amount to entrust before decid-ing whether to cooperate will be weakerwhen no ldquoshadow of the futurerdquo is presentThis implies

Hypothesis 4 The cooperation rate in therandom-partner PDR (condition 3) will be

lower than in the fixed-partner PDR (condi-tion 2)

To test whether or not cooperation isenhanced by choosing the level of risk one iswilling to take one can compare cooperationrates in the random-partner PD in Phase Iwith those in the random-partner PDR inPhase II In Phase I the computer determinesthe amount in Phase II the participant makesthis decision Assuming that cooperation isimproved by a reduction in the second-orderfear of exploitation caused by indicatingonersquos willingness to take a risk at some levelwe predict

Hypothesis 5 The cooperation rate in PhaseII will be higher than in Phase I in the ran-dom-partner PDR (condition 3)

Are American participants expected tocooperate in the PDR game more fully thanJapanese participants even when there is noldquoshadow of the futurerdquo In Hypothesis 2 wepredicted that American participants willtrust their partners more fully than willJapanese participants even in the random-partner PDR in which partners change oneach trial At the same time we expect thechoice of amount to entrust to onersquos partnerto have a weaker effect on cooperation in therandom-partner PDR than in the fixed-part-ner PDRTherefore we expect that the high-er level of trusting behavior (indicated byhigher levels of investment) expected ofAmerican participants in the random-partnerPDR will not particularly make them morecooperative than the Japanese participantsGiven that partners are assigned randomlyon each trial differential levels of risk taking(or investment) should not have any impacton subsequent levels of cooperation There isno reason to expect a cross-national differ-ence in this effect

Hypothesis 6 Allowing participants to choosethe level of investment in Phase II of the ran-dom-partner PDR (condition 3) will notaffect cooperation rates differentially forAmerican and Japanese participants in thiscondition

Finally we offer no specific predictionsconcerning cultural differences in the partici-pantsrsquo behavior in the random-partner PDcondition (Phase I of the experiment)



Mon 27 Nov 2006 174358


Individual differences in the participantsrsquotendency to trust other people in general(ie general trust) are related to the level ofcooperation in addition Americans who arehigher than Japanese in general trust(Yamagishi and Yamagishi 1994) are morecooperative in the N-person version of a PDor a social dilemma (Sato and Yamagishi1986 Yamagishi 1986 1988 1990 1992)These findings however have not beenobtained consistently in dyadic PDsThe indi-vidual or cultural differences in the tendencyto trust other people in general are less rele-vant in a dyadic relation in which the partici-pants face a particular partner than in morediffuse N-person relations where generaltrust might operate

FINDINGS

To make the Japanese and the Americandata compatible we decided to use only thefirst 60 of the 70 trials of American data The60 decision trials in the experiment wereaggregated into 12 blocks each consisting offive trialsThe dependent variables to be ana-lyzed are the cooperation rate17 and the aver-age number of coins entrusted to the partnerin each trial block18

Cooperation Rates in Phase I

Participants in all conditions in Phase Iexperience the same PD game with randompartners on each trial thus we have no reasonto expect any differences between the threeconditions As shown in Figure 3 howeverwe observe substantial unexpected differ-ences in the cooperation rates in Phase I Anationality times condition times trial block repeated-measure analysis of variance revealed a sig-nificant effect of the game condition F(1292) = 1099 p lt 0001 None of the interac-tion effects involving the game conditionwere significant The significance of the main

effect suggests a possible failure in the ran-domness of assigning participants into condi-tions Yet the lack of significant interactioneffects involving the game condition suggeststhat the differences in the levels of coopera-tion rates in Phase I are not likely to interactwith our other variables Thus in analyzingcooperation rates in Phase II below we con-trol for individual differences in levels ofcooperativeness observed in Phase I Figure 3presents the average cooperation rate overthe 12 trial blocks Figure 4 depicts the aver-age change in cooperation ratemdashthat is thedifference in the average cooperation rateoverall and the average cooperation rate inPhase I for the seven trial blocks in Phase II

Other significant effects in this repeated-measure ANOVA are the main effect of trialblock and the main effect of nationality Themain effect of trial block was highly signifi-cant F(4 1168) = 1037 p lt 0001 As shownin Figure 3 the cooperation rate in Phase Ideclined over trial blocks in all conditionsThe interaction between trial blocks andgame condition was not significant The maineffect of nationality however was significantF(1 292) = 443 p lt 05 The Japanese partic-ipants (42 sd = 26) were more cooperativethan the American participants (39 sd = 28)though this difference is not large

Hypotheses 1 and 3


As shown in Figure 3 the cooperationrate in the fixed-partner PDR condition inPhase II was much higher than in the fixed-partner PD condition To test the differencebetween the two game conditions we con-ducted a nationality times game condition times trialblock repeated-measure ANOVA in whichthe game condition included only the rele-vant conditions namely the fixed-partner PDand the fixed-partner PDR conditions Themain effect of the game condition in thisANOVA was highly significant F(1 206) =1977 p lt 0001 (F(1 205) = 2753 p lt 0001when the cooperation level in Phase I is con-trolled) Furthermore the game condition times


17 This rate transformed the binary response ineach trial (returned versus did not return the entrust-ed coins) into a continuous variable

18 The fifth trial block (the last block in Phase I) inthe Japanese data included only four trials and thesixth trial block (the first block in Phase II) includedsix trials because Phase I in the Japanese data consist-ed of 24 trials not 25


Mon 27 Nov 2006 174358

TRUST BUILDING 135

trial block interaction also was highly signifi-cant F(1 1236) = 794 p lt 0001 In trial block6 (the beginning of Phase II) the cooperationrate in the fixed-partner PDR was 75 per-centage points higher than in the fixed-part-ner PD at the same trial block Thisdifference increased to 212 percentage

points by the last trial block (the end of Phase

II) indicating that the cooperation rate

indeed was much higher by the end of the

fixed-partner PDR (condition 2) than in the

fixed-partner PD (condition 1) Hypothesis 1

thus was clearly supported


Figure 3 Average Cooperation Rate (Proportion of Coins Returned) Across Trial Blocks American andJapanese Participants

Figure 4 Difference in Cooperation Rate from Phase I Across Trial Blocks in Phase II American andJapanese Participants


Mon 27 Nov 2006 174358



As predicted in Hypothesis 3 the effectof choosing the amount to entrust wasstronger among Americans than among ourJapanese participants The effect of the gamecondition interacted significantly withnationality F(1 206) = 559 p lt 05 (F(1 205)= 609 p lt 05 with the cooperation level inPhase I controlled) During Phase II theAmerican participantsrsquo average cooperationrate was 90 in the fixed-partner PDR game58 in the fixed-partner PD game this differ-ence was quite large (32) In contrast theJapanese participantsrsquo average cooperationrate was 76 in the fixed-partner PDR gameand 66 in the fixed-partner PD game a muchsmaller difference (10) The main effect ofnationality was not significant F(1 206) =41 ns Finally the main effect of trial blockwas not significant F(1 1236) = 87 nswhereas the effect of the nationality times gamecondition times trial block interaction F(6 1236)= 306 p lt 01 was significantThe increase inthe positive effect on cooperation of thechoice to entrust was observed among theAmerican participants but not among theJapanese (see Figure 3) The American par-ticipants cooperated 141 percentage pointsmore in the fixed-partner PDR than in thefixed-partner PD in the first trial block ofPhase II (trial block 6) this differenceincreased to 399 percentage points in the lastthree trial blocks Among the Japanese par-ticipants however the difference was 60 per-centage points in the first trial block of PhaseII and only 119 percentage points during thelast half of Phase II These results providestrong support for Hypothesis 3

Hypothesis 2

Hypothesis 2 predicts that American par-ticipants will exhibit a higher level of trustingbehavior (will entrust more coins in an act ofrisk taking) than will Japanese participants inboth the fixed-partner PDR and the ran-dom-partner PDR As predicted theAmerican participantsrsquo average amountentrusted to others was higher than that ofJapanese participants in both the fixed-part-

ner PDR (892 coins versus 735 coins) andthe random-partner PDR (681 versus 506)The main effect of nationality in a nationalitytimes game condition times trial block ANOVA oftrusting behavior (the number of coinsentrusted by the participants) was highly sig-nificant F(1 210) = 1843 p lt 0001 In thisanalysis we used only the fixed-partnerPDR and the random-partner PDR becauseno option for trusting behavior (choosing thelevel to invest) existed in the fixed-partnerPD condition The nationality x game condi-tion interaction effect was not significantF(1 210) = 07 ns The main effect of trialblock however was significant F(6 1260) =987 p lt 0001 The nationality times trial blockinteraction effect was only marginally signifi-cant F(6 1260) = 195 p lt 08 As demon-strated in Figure 5 the level of trustingbehavior increased over time during PhaseII but this increase occurred primarilyamong the Americans

These results clearly support Hypothesis2 American participants exhibit trustingbehavior at a higher level than do theJapanese whether or not it is possible tobuild trust relationships with a particularpartner This finding indicates that theAmericansrsquo stronger inclination to take a riskto build trust and the Japanese participantsrsquorelative reluctance to take such risks do notreflect their differences in desire to buildtrust relationships Rather they seem toreflect general differences in their overalltendencies to avoid uncertainty as we dis-cussed earlier in this paper

In addition to the significant effect ofnationality the ANOVA indicates a highlysignificant effect of game type F(1 210) =3370 p lt 0001 Participants entrusted morecoins when it was possible to build trust rela-tionships with a particular partner (770coins) than when building such relationshipswas not possible (598 coins) Furthermorethe significant game condition times trial blockinteraction effect F(6 1260) = 1589 p lt0001 indicates (as anticipated) that partici-pants engaged increasingly in trusting behav-ior over time in the fixed-partner PDR morethan in the random-partner PDRInvestments in a partner (entrusting morecoins) do not pay off in the absence of con-secutive repeat play with the same partner



Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4

Hypothesis 4 states that the overall levelof cooperation will be lower in the random-partner PDR than in the fixed-partnerPDRThe main effect of game condition in anationality times game condition (fixed-partnerPDR versus random-partner PDR) times trialblock ANOVA was highly significant F(1210) = 5382 p lt 0001 (F(1 209) = 13702 p lt001 with control of cooperation in Phase I)As shown in Figure 3 the cooperation rate ismuch higher in the fixed-partner PDR thanin the random-partner PDR Furthermorethe game condition times trial block interactioneffect was significant F(1 1260) = 932 p lt0001 This interaction effect shows that par-ticipants in the fixed-partner PDR cooperat-ed more over time than participants in therandom-partner PDR As Figure 3 demon-strates cooperation rates increased slowlyacross trial blocks in the fixed-partner PDRwhile they decreased across blocks in the ran-dom-partner PDR These results supportHypothesis 4

Hypotheses 5 and 6

Hypothesis 5 concerns the comparisonbetween the cooperation rates in Phase I and

in Phase II in the random-partner PDR con-dition To test this hypothesis we used thecooperation rates in Phase I and Phase II as arepeated measure in a nationality times phase (Iversus II) ANOVA The main effect of phasewas not significant F(1 86) = 12 ns Theintroduction of Phase II (PDR with randompartner) after trial block 5 seems to exert apositive effect on cooperation as shown inFigure 3 but this positive effect is minor andshort-lived The cooperation rate in Phase IIdid not exceed the overall cooperation rate inPhase IAs a result this finding does not sup-port Hypothesis 5

Hypothesis 6 states that allowing partici-pants to choose the level of investment inPhase II of the random-partner PDR condi-tion will not affect cooperation rates differ-entially for American and Japaneseparticipants Neither the main effect ofnationality F(1 86) = 33 ns nor the nation-ality times phase interaction effect F(1 86) =132 ns was significant in this ANOVA Thelack of an interaction effect indicates thatallowing the choice of levels of risk taking (orinvestment) does not exert differentialeffects on levels of cooperation for Americanand Japanese participants Thus Hypothesis 6is supported


Figure 5 Average Number of Coins Entrusted Over Trial Blocks in Phase II American and JapaneseParticipants


Mon 27 Nov 2006 174358


Cooperation Rates in the Fixed-Partner PDCondition

We do not offer a specific predictionabout the cooperation rates in the fixed-part-ner PD condition with respect to nationalityThe results reported in Figure 3 indicate thatthe cooperation rate in the fixed-partner PDcondition in which the participants could notdetermine the number of coins to entrustwas higher among Japanese than amongAmerican participants On average the coop-eration rate was 66 (sd = 35) amongJapanese participants but 58 (sd = 31)among Americans The main effect of nation-ality in the nationality times trial block ANOVAwas not significant F(1 82) = 115 ns Themain effect of trial block was significant F(6492) = 386 p lt 001 so was the nationality timestrial block interaction effect F(6 492) = 316p lt 01 These effects reflect the downwardtrend in cooperation rates over time amongthe Americans during Phase II The Japanesecooperation rates in contrast stayed at aboutthe same level throughout Phase II Giventhat the cooperation rate was higher for theJapanese than for the American participantsin Phase I the Japanese participants seemslightly more willing to cooperate than do theAmericans in the absence of the option toselect the amount to entrust to others

Initial Cooperators Versus Initial Defectors

In the introduction we asked whetherinitial cooperators or initial defectors takemore risks to build trust when they are givena chance to do so Initial cooperators arethose who cooperated at a high level (higherthan the median cooperation level for theparticipants of the same nationality and con-dition ) in Phase I in which they received noopportunity to choose the amount to entrustInitial defectors are those who cooperated ata low level In the nationality x game condi-tion (fixed-partner PDR versus random-partner PDR) x initial level of cooperation(initial cooperators versus initial defectors)ANOVA of the average amount of moneyentrusted to a partner the main effect of theinitial level of cooperation was highly signifi-cant F(1 206) = 1479 p lt 001 The initialcooperators more than the initial defectorsentrusted more money (778 versus 618)

In addition the game condition x initiallevel of cooperation interaction was margin-al F(1 206) = 327 p lt 08 and the nationali-ty x game condition x initial level ofcooperation interaction was significant F(1206) = 563 p lt 05 The initial cooperatorsrsquowillingness to entrust in comparison with theinitial defectorsrsquo was more pronounced in therandom-partner PDR (696 vs 499) than inthe fixed-partner PDR (833 vs 705) Thisresult however may have been caused by aceiling effect The average amount entrustedwas close to 10 the highest possible level inthe fixed-partner PDR among the initialcooperators Similarly the significant three-way interaction seems to be a result of theextremely high amount entrusted by theAmerican participants in the fixed-partnerPDR In general in the fixed-partner PDRinvolving American participants includingthe initial defectors (911 coins) and the ini-tial cooperators (870 coins) coins wereentrusted at very high levels In contrast theinitial Japanese cooperators entrusted morecoins than did the initial Japanese defectors(825 vs 637) in the fixed-partner PDR Inthe random-partner PDR both Americanand Japanese initial cooperators (815 and577) entrusted more than the initial defec-tors (557 and 429)

The option to choose the amount toentrust helped initial defectors more than ini-tial cooperators to achieve a higher level ofcooperation over time in the fixed-partnercondition but not in the random-partner con-dition To analyze the effect of the option toentrust on cooperation we used the differ-ence in cooperation during Phase II andPhase I how much the cooperation levelimproved because of the introduction of theoption to entrust different amountsThe maineffect of the initial level of cooperation in thenationality x game condition x initial level ofcooperation ANOVA of the improvement incooperation was highly significant F(1 206)= 2290 p lt 0001 The initial defectorsrsquo coop-eration rate improved by 33 but that of theinitial cooperators improved by only 18 Thedifferential effect on cooperation of theoption to entrust is not likely to be attributedto regression toward the mean because thedifferential effect existed only in the fixed-partner condition (54 vs 33) and not in the



Mon 27 Nov 2006 174358

TRUST BUILDING 139

random-partner condition (04 vs ndash04) Thegame condition x initial level of cooperationinteraction was significant F(1 206) = 660 plt 01 These results indicate that the positiveeffect of the option to take risks by entrustingdifferent amounts (Hypothesis 1) is morepronounced for initial defectors than for ini-tial cooperators None of the interactioneffects involving nationality and initial levelof cooperation were significant

DISCUSSION AND CONCLUSIONS

The results of this experiment are rela-tively straightforward Five of our sixhypotheses were clearly supportedProviding an opportunity to choose the levelof risk involved in trusting another helped toimprove mutual cooperation for bothAmerican and Japanese participants(Hypothesis 1) Furthermore the Americanparticipants engaged in a higher level of risktaking to build trust than the Japanese(Hypothesis 2) as a result they achievedrelationships in which the exchange partnerstrusted each other and honored each otherrsquostrust (Hypothesis 3) in a cooperative fashionThese are the core hypotheses we addressedhere

The remaining three hypotheses com-pared the effects of the choice of level of risktaking on cooperation among fixed pairs ofpartners as compared with randomlymatched partners The positive effect oncooperation of allowing participants tochoose the level of risk to take with theirpartner was found to be much weaker whenit was not possible to build a relationshipwith a particular partner (in the random-partner PDR condition) than when such arelationship was possible (in the fixed-part-ner PDR condition Hypothesis 4)American participants took more risks thanthe Japanese and trusted their partners moreeven in random partner exchanges(Hypothesis 2) this finding supports the gen-eral claim that the Japanese are inclined toavoid uncertainty Even so American partici-pants were no better than the Japanese atraising the actual level of cooperation(Hypothesis 6)

Only one hypothesis failed to receiveempirical support namely our tentative

proposition about the potential reduction inthe second-order fear of exploitation by oth-ers (Hypothesis 5)We found some indicationthat allowing participants to signal their levelof trust improves cooperation at least tem-porarily as indicated by the surge in thecooperation rate at the beginning of Phase IIin the PDR with random-partner conditionbut that effect is short-lived Participantsrsquowillingness to take risks and trust their part-ners engenders greater mutual cooperationonly when a trusting relationship can beestablished gradually with a specific partner

The results of our experiment indicatethat the American participants were morewilling than the Japanese to take risks and totrust their partners This greater willingnesshelped the Americans more than theJapanese to build trust relations when andonly when they engaged continuously inexchanges with the same partners Japaneseparticipants in fact were more cooperative inthe simple PD conditionsmdashthat is in Phase Iin which they played a random-partner PDgame and in the fixed-partner PD conditionin which participants were not allowed toexplicitly take risks in order to build trustrelations with their partners over time Thisdifference was reversed in the PDR gamewhen the participants were allowed tochoose the level of risk to take with theirpartners so as to build trust

The message of this study is clear andprofound Risk taking is a critical element intrust building for Americans but less for theJapanese Our results provide convincingsupport for the claim that trust is not thesame as the lack of risk taking in social rela-tions Rather trust can be built by initial risktakingAs shown by the results from the stan-dard PD condition in our study past researchon trust which failed to separate trustingbehavior from acts of cooperation wasunable to capture the critical role of risk tak-ing in building trust In fact in much of theearlier experimental research on trust trust-ing and cooperation were confounded boththeoretically and empirically It is very impor-tant to distinguish trusting behavior fromcooperation and to measure them separatelyif we are to study trust and trust building inrelation to cooperation and to other socially



Mon 27 Nov 2006 174358


significant outcomes of trust This is the mostimportant implication of our findings

We also discovered important implica-tions of the US-Japan differences in trustand cooperation In the absence of opportu-nities to engage in risk taking to demonstratewillingness to trust a partner American par-ticipants were less cooperative than theirJapanese counterparts With the addition ofopportunity to take risks to demonstrate suchwillingness behaviorally the levels of cooper-ation between the two groups of participantschanged dramatically Given the opportunityto signal willingness to trust a partner theAmericans not only were more willing thanthe Japanese to take risks in order to createtrust relations with their partners they alsobecame more cooperative and built strongertrust relations

The finding that Americans are moresuccessful in building trust relations whenrisk taking is required is somehow counterin-tuitive It contradicts views often expressedby naiumlve observers of the American andJapanese cultures who expect more trust inwhat they consider to be a more collectivelyoriented society Nevertheless this finding isconsistent with the conclusions derived fromprevious cross-societal research on trust Aswe discussed in the introduction the funda-mental difference between trust and assur-ance as a means of dealing with socialuncertainty and risk resides in the specificrole of risk takingTrusting initially requires aform of risk taking in which one allows adegree of vulnerability whereas assurance isa product of risk avoidance or reliance onrisk-reducing structural arrangements suchas the formation of commitments

Finally the PDR game used in this studyis not only a useful methodological tool forempirically investigating the process of trustbuilding as demonstrated here It also pro-vides a clear conceptual framework for ana-lyzing the logic involved in trust building Byseparating out the act of risk taking thatmakes trust relations possible and enhancescooperation in a dynamic context the PDRgame allows us to analyze the transformationof opportunistic relations into trust relationsmediated by the intricate interplay betweenacts of trust and mutual cooperation Thenext step will involve constructing theoretical

models that capture this complex interplayand testing them in a wider array of structur-al and cultural settings In view of recentevents understanding the role of risk takingin building cross-cultural trust relations couldnot be more timely

REFERENCES

Arneson Richard J 1982 ldquoThe Principle ofFairness and the Free-Rider ProblemrdquoEthics 92616ndash33

Axelrod Robert 1984 The Evolution ofCooperation New York Basic Books

Berg Joyce John Dickhaut and Kevin A McCabe1995 ldquoTrust Reciprocity and SocialHistoryrdquo Games and Economic Behavior10122ndash42

Blau Peter M 1964 Exchange and Power in SocialLife New York Wiley

Bolton Gary E Elena Katok and AxelOckenfels 2003 ldquoCooperation AmongStrangers With Limited Information AboutReputationrdquo Working paper Smeal Collegeof Business Administration Penn StateUniversity Philadelphia

Buchan Nancy R Rachel TA Croson and RobynM Dawes 2002 ldquoSwift Neighbors andPersistent Strangers A Cross-CulturalInvestigation of Trust and Reciprocity inSocial Exchangerdquo American Journal ofSociology 108168ndash206

Cook Karen S ed 2001 Trust in Society NewYork Russell Sage Foundation

Dasgupta Partha 1988 ldquoTrust As a CommodityrdquoPp 49ndash72 in Trust Making and BreakingCooperative Relations edited by DiegoGambetta Oxford Blackwell

Deutsch M 1973 The Resolution of ConflictConstructive and Destructive ProcessesLondon Yale University Press

Etzioni Amitai 1967 ldquoA Nonconventional Use ofSociology As Illustrated by PeachResearchrdquo Pp 806ndash38 in The Uses ofSociology edited by Paul R LazarsfeldWilliam H Sewell and Harold L WilenskyNew York Basic Books

mdashmdashmdash 1969 ldquoSocial Psychological Aspects ofInternational Relationsrdquo Pp 538ndash601 inHandbook of Social Psychology 2nd ed vol5 edited by Gardner Lindzey and ElliotAronson Reading MA Addison-Wesley

Farrell Henry 2004 ldquoTrust Distrust and PowerrdquoPp 85ndash105 in Distrust Edited by RussellHardin New York Russell Sage Foundation

Hardin Russell 2002 Trust and TrustworthinessNew York Russell Sage Foundation

Hayashi Chikio Tatsuzo Suzuki and MasakatsuMurakami 1982 A Study of Japanese



Mon 27 Nov 2006 174358

TRUST BUILDING 141


National Character vol 4 TokyoIdemitsushoten

Hofstede Geert H 1980 Culturersquos ConsequencesInternational Differences in Work-RelatedValues Beverly Hills Sage

mdashmdashmdash 1991 Cultures and OrganizationsSoftware of the Mind London McGraw-Hill

Holmes John G and John K Rempel 1989 ldquoTrustin Close Relationshipsrdquo Pp 187ndash220 in CloseRelationships edited by Clyde HendrickThousand Oaks CA Sage

Hsee Christopher K and Elke U Weber 1999ldquoCross-National Differences in RiskPreference and Lay Predictionsrdquo Journal ofBehavioral Decision Making 12165ndash79

Kakiuchi Riki and Toshio Yamagishi 1997ldquoGeneral Trust and the Dilemma of VariableInterdependencyrdquo Japanese Journal of SocialPsychology 12212ndash21

Kollock Peter 1994 ldquoThe Emergence ofExchange Structures An ExperimentalStudy of Uncertainty Commitment andTrustrdquo American Journal of Sociology100313ndash45

Kreps David M 1990 ldquoCorporate Culture andEconomic Theoryrdquo Pp 90ndash143 inPerspectives on Positive Political Economyedited by James E Alt and Kenneth AShepsle Cambridge UK CambridgeUniversity Press

Levi Margaret and Laura Stoker 2000 ldquoPoliticalTrust and Trustworthinessrdquo Annual Reviewof Political Science 3475ndash508

Lindskold Svenn 1978 ldquoTrust Development theGRIT Proposal and the Effects ofConciliatory Acts on Conflict andCooperationrdquo Psychological Bulletin85772ndash93

Matsuda Masafumi and Toshio Yamagishi 2001ldquoTrust and Cooperation An ExperimentalStudy of PD With Choice of DependencerdquoJapanese Journal of Psychology 72413ndash21

Meeker Barbara F 1983 ldquoCooperativeOrientation Trust and Reciprocityrdquo HumanRelations 3225ndash43

Molm Linda and Karen S Cook 1995 ldquoSocialExchange and Exchange Networksrdquo Pp209ndash35 in Sociological Perspectives on SocialPsychology edited by Karen S Cook GaryAlan Fine and James S House BostonAllynand Bacon

Molm Linda Gretchen Peterson and NobuyukiTakahashi 2001 ldquoThe Value of ExchangerdquoSocial Forces 80159ndash84

Orbell John and Robyn Dawes 1993 ldquoSocialWelfare Cooperatorsrsquo Advantage and theOption of Not Playing the Gamerdquo AmericanSociological Review 58787ndash800

Osgood Charles E 1962 An Alternative to War or

Surrender Urbana University of IllinoisPress

Pilisuk Marc and Paul Skolnick 1968 ldquoInducingTrust A Test of the Osgood ProposalrdquoJournal of Personality and Psychology8121ndash33

Pruitt Dean G and Melvin J Kimmel 1977ldquoTwenty Years of Experimental GamingCritique Synthesis and Suggestions for theFuturerdquo Annual Review of Psychology28363ndash92

Sato Kaori and Toshio Yamagishi 1986 ldquoTwoPsychological Factors in the Problem ofPublic Goodsrdquo Japanese Journal ofExperimental Social Psychology 2689ndash95

Snijders Chris 1996 Trust and CommitmentsUtrecht Interuniversity Center for SocialScience Theory and Methodology

Solomon L 1960ldquoThe Influence of Some Types ofPower Relationships and Game StrategiesUpon the Development of InterpersonalTrustrdquo Journal of Abnormal SocialPsychology 61223ndash30

Triandis Harry C ldquoThe Contingency Model inCross-National Perspectivesrdquo Pp 167ndash88 inLeadership Theory and ResearchPerspectives and Directions edited by MartinM Chemers and Roya Ayman San DiegoAcademic Press

Weber Elke U Christopher Hsee and JoannaSokolowska 1998 ldquoWhat Folklore Tells UsAbout Risk and Risk Taking Cross-CulturalComparisons of American German andChinese Proverbsrdquo Organizational Behaviorand Human Decision Processes 75 170ndash86

Yamagishi Toshio 1986 ldquoThe Provision of aSanctioning System As a Public GoodrdquoJournal of Personality and Social Psychology51110ndash16

mdashmdashmdash 1988 ldquoThe Provision of a SanctioningSystem in the United States and JapanrdquoSocial Psychology Quarterly 5132ndash42

mdashmdashmdash 1990 ldquoFactors Mediating ResidualEffects of Group Size in Social DilemmasrdquoThe Japanese Journal of Psychology61162ndash69

mdashmdashmdash 1992 ldquoGroup Size and the Provision of aSanctioning System in a Social DilemmardquoPp 267ndash87 in A Social PsychologicalApproach to Social Dilemmas edited byWim BG Liebrand David M Messick andHenk AM Wilke Oxford Pergamon

mdashmdashmdash 1998 The Structure of Trust TheEvolutionary Game of Mind and SocietyTokyo University of Tokyo Press

Yamagishi Toshio Karen S Cook and MotokiWatabe 1998 ldquoUncertainty Trust andCommitment Formation in the United Statesand Japanrdquo American Journal of Sociology104165ndash94


Mon 27 Nov 2006 174358


Karen S Cook is the Ray Lyman Wilbur Professor of Sociology and Senior Associate Dean ofthe Social Sciences at Stanford University She is currently engaged in research on commitmentand trust in social exchange relations and is the co-editor of the Trust Series for the Russell SageFoundation

Toshio Yamagishi is a professor of social psychology in the Department of Behavioral ScienceHokkaido University His research interests include trust social intelligence and culture

Coye Cheshire is a doctoral student in the Department of Sociology at Stanford University Hisdissertation examines the emergence of generalized information exchange systems such as thosefound on the Internet

Robin M Cooper is a lecturer in sociology at Stanford University where she received her PhDin 2004 She wrote her dissertation on cultural and situational effects on personal identity Shehas also published on cooperation and trust

Masafumi Matsuda is a researcher at Nippon Telegraph and Telephone Corporation in theNTT Communication Science Laboratories Currently he is designing e-commerce transactionand reputation systems

Rie Mashima is a doctoral student in the Department of Behavioral Science HokkaidoUniversity Her current research interests focus on generalized exchanges and social dilemmas


Yamagishi Toshio and Riki Kakiuchi 2000 ldquoItTakes Venturing Into a Tigerrsquos Cave to Steala Baby Tiger Experiments on theDevelopment of Trust Relationshipsrdquo Pp121ndash23 in The Management of DurableRelations edited by Werner Raub andJeroen Weesie Amsterdam Thela

Yamagishi Toshio and Kaori Sato 1986

ldquoMotivational Bases of the Public GoodsProblemrdquo Journal of Personality and Social

Psychology 5067ndash73Yamagishi Toshio and Midori Yamagishi 1994

ldquoTrust and Commitment in the United Statesand Japanrdquo Motivation and Emotion

18129ndash66


Mon 27 Nov 2006 174358


will gain from an exchange with a potentialpartner if that partner turns out to be trust-worthy Yet there is always the risk of poten-tial loss if the partner is not

Typically there is no basis for expectingtrustworthy behavior from a new potentialexchange partner In addition in many situa-tions no regulatory agency exists to controlbehavior and there is little initial informationabout the reputations of possible exchangepartners Moreover monitoring and sanction-ing are usually too costly even in specific orga-nizational settings Under these conditions fewrational people would engage in exchangethus the benefits that could be obtained frommutual exchange are not realized

In situations containing the clear risk ofopportunism a trust relation in which oneperson can expect trustworthy behaviorfrom another becomes a highly valuablecommodity Such a relation is too valuableto jeopardize by engaging in the kind ofmyopic opportunistic behavior that gener-ates short-term gain but blocks the possibil-ity of building a long-term relationship Ifyou have a trustworthy friend or a businesspartner who reliably acts in a trustworthymanner you would not want to lose thatperson as an exchange partner This impliesthat a trust relation is self-sustaining in thesense that each person has an incentive tomaintain the relationship once it develops(Blau 1964 Hardin 2002) Unilaterallyuntrustworthy behavior in an exchange situ-ation destroys the opportunity to gain bene-fits that can only be generated throughmutual trust

A major obstacle to trust building howev-er is the initial lack of trust in onersquos potentialexchange partner One way to encourageanother to act in a trustworthy manner is toincrease onersquos own value to that personYet tomake oneself valuable to a potential partnerone somehow must invite that person to betrusting This situation is a classic ldquoCatch-22rdquoeach party must induce her or his partner to betrusting before actually proving her own trust-worthiness Therefore a unilateral act of trustby one partner involving risk taking2 is

required to break the deadlock of a mutuallack of trust

The key to success in breaking this dead-lock lies in the use of a GRIT (graduated rec-iprocation in tension reduction) strategy as ithas been called in the conflict literatureOsgood (1962) proposed GRIT as an effec-tive methodology for mutual disarmamentduring the cold war as well as for other con-flict situations involving risk He proposedthat the series of moves aimed at eliminatingtensions must be both graduated and recipro-cated A player starts with a unilateral yetlow-risk move to alleviate tension and thenwaits until his partner reciprocates thatmoveWhen it is reciprocated the next initia-tive for alleviating tension involves a littlemore risk According to Etzioni (1967 1969)this strategy led to success in the ldquoKennedyExperimentrdquo which took place between June10 and November 22 1963 in reducing ten-sion between the United States and theSoviet Union during the Cuban missile crisis

Without actual knowledge of the GRITstrategy the most successful participants(those who earned the most) in Matsuda andYamagishirsquos (2001) recent experiment usedbasically a GRIT-type strategy in buildingtrust with their partners Initially they coop-erated unilaterally entrusting only a smallamount to the partner then they increasedthe amount over time as the partner demon-strated her or his trustworthiness A relative-ly high level of mutual cooperation wasachieved in this study in which participantsused a new variant of the prisonerrsquos dilemmasetting called a PDD In this setting in con-trast to the standard one-shot prisonerrsquosdilemma or other repeated PD experimentsthe participants can lower the stakes involvedand minimize their initial risk (the amountthey entrust) without compromising theirown willingness to cooperate until a trustrelationship has formed

In the ordinary repeated prisonerrsquosdilemma (PD) this strategy is not possiblebecause the choice of cooperation or defec-tion may reflect either trust (or lack of it) orwillingness (or unwillingness) to cooperateThose who are afraid that their partner willnot cooperate often refuse to cooperate evenwhen they might be willing to cooperate withsomeone they assume might be generally


2 This is the same risk as is involved in the firstmove in reciprocal exchange (see Molm and Cook1995 Molm Petersen and Takahashi 2001)


Mon 27 Nov 2006 174358

TRUST BUILDING 123












Mon 27 Nov 2006 174358











Mon 27 Nov 2006 174358

TRUST BUILDING 125












Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 123












Mon 27 Nov 2006 174358











Mon 27 Nov 2006 174358

TRUST BUILDING 125












Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358











Mon 27 Nov 2006 174358

TRUST BUILDING 125












Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 125












Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 127











Return

Not Return

10 15

10 0

0 5

15 5




Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358












Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 129




THE EXPERIMENT

Participants











Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358





Procedure Summary


Phase I











Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 131



Phase II








Phase I Phase II





partner partner



Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358









Hypotheses






Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 133















Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358



FINDINGS






Hypotheses 1 and 3







Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 135












Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358




Hypothesis 2







Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 137

Hypothesis 4


Hypotheses 5 and 6







Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358










Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 139











Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358







REFERENCES

















Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

TRUST BUILDING 141

































Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358














18129ndash66


Mon 27 Nov 2006 174358

Documents

Trust Building via Risk Taking: A Cross-Societal …people.ischool.berkeley.edu/~coye/Pubs/Articles/Trust...used a new variant of the prisonerÕs dilemma setting called a PD/D. In