UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Beliefs and actions in the trust game: creating instrumental variables to estimate the causal effect

Costa-Gomes, M.A.; Huck, S.; Weizsäcker, G.; (2010) Beliefs and actions in the trust game: creating instrumental variables to estimate the causal effect. (ELSE Working Papers 368). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

[thumbnail of 19473.pdf]
Preview
PDF
19473.pdf

Download (240kB)

Abstract

In many economic contexts, an elusive variable of interest is the agent's expectation about relevant events, e.g. about other agents' behavior. Recent experimental studies as well as surveys have asked participants to state their beliefs explicitly, but little is known about the causal relation between beliefs and other behavioral variables. This paper discusses the possibility of creating exogenous instrumental variables for belief statements, by shifting the probabilities of the relevant events. We conduct trust game experiments where the amount sent back by the second player (trustee) is exogenously varied by a random process, in a way that informs only the �first player (trustor) about the realized variation. The procedure allows detecting causal links from beliefs to actions under plausible assumptions. The IV estimates indicate a signi�ficant causal effect, comparable to the connection between beliefs and actions that is suggested by OLS analyses.

Type: Working / discussion paper
Title: Beliefs and actions in the trust game: creating instrumental variables to estimate the causal effect
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php#2010
Language: English
Keywords: Social capital, trust game, instrumental variables, belief elicitation
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/19473
Downloads since deposit
308Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item