“Confidentially Yours”: Restricting Information Flow Between Trustees Enhances Trust-Dependent Transactions

Vincent Mak, The Hong Kong University of Science and Technology, Hong Kong
Rami Zwick, The Hong Kong University of Science and Technology, Hong Kong
We study how restricting information flow between trustees can enhance trust and reciprocity in trust-dependent transactions using experimental economics techniques. We focus on different information conditions regarding whether each trustee only knows the amount received by herself or also knows the amount received by other trustees. Results from theoretical reasoning and two experiments suggest that, compared with the full information condition, when information flow between trustees is restricted: (a) total investment is larger, (b) the number of trustees receiving non-zero investment is not significantly different, and (c) the investor sends out a larger variety of invested amounts to different trustees.
[ to cite ]:
Vincent Mak and Rami Zwick (2007) ,"“Confidentially Yours”: Restricting Information Flow Between Trustees Enhances Trust-Dependent Transactions", in NA - Advances in Consumer Research Volume 34, eds. Gavan Fitzsimons and Vicki Morwitz, Duluth, MN : Association for Consumer Research, Pages: 632-633.