Traditional trust measurement and the risk confound: An experiment in rural Paraguay

  • Schechter L
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Abstract

Play in the traditional trust experiment depends both on trust beliefs and on levels of risk aversion. We ran two experiments with a diverse set of subjects in 15 villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. We find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions significantly changes the coefficients of important explanatory variables such as gender and wealth. © 2005 Elsevier B.V. All rights reserved.

Author-supplied keywords

  • Experiment
  • Gender
  • Paraguay
  • Risk aversion
  • Trust

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