Implications of Game Triads and Social Contexts
By James C. Cox
Abstract
This paper introduces a triadic game structure for conducting trust and reciprocity experiments. A large literature on single-game trust and reciprocity experiments is based on the assumption that subjects’ game payoffs are affine transformations of (only) their own monetary payoffs. Such designs test compound hypotheses that include the hypothesis that other-regarding preferences do not affect behavior in the experiments. In contrast, the experiments with the game triads reported in this paper do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other-regarding preferences. Alternative treatments vary the environment of the experiments from a weak to a strong social context. The observations in two social contexts of decisions motivated by other-regarding preferences, trust, and reciprocity are central to obtaining empirical information that can guide the process of formulating a theory of utility that can increase the empirical validity of game theory. The implications of the results for recent extensions of theory are explored.