Outcomes and expectations in dilemmas of trust

Rational trust decisions depend on potential outcomes and expectations of reciprocity. In the trust game, outcomes and expectations correspond to the structural factors of risk and temptation. Two experiments investigated how risk and temptation influenced information search and final decisions in the trust game. The central finding was that trustors under-emphasized temptation relative to its effects on the expected value of trust. Instead, trustors made decisions egocentrically, focusing on potential outcomes. In Experiment 1, information search data revealed that trustors often made decisions without learning about the payoffs related to temptation. Experiment 2 investigated whether trustors were able to use temptation to form accurate expectations of reciprocity. Trustors understood, but underestimated, the relationship between temptation and the probability of reciprocity. Moreover, they did not fully consider expectations in their final trust decisions. Changes in potential outcomes had larger effects on trust than comparable changes in expectations. These results suggest that levels of trust are too high when the probability of reciprocity is low and too low when that probability is high.