Temporal Embeddedness and Signals of Trustworthiness: Experimental Tests of a Game Theoretic Model in the United Kingdom, Russia, and Switzerland

Abstract

Based on signalling theory, Posner (1998, 2000) suggests that seemingly irrational behaviour or social norms emerge because they help to distinguish agents who prefer to engage in repeated cooperative interactions (long-term types) from agents with immediate non-cooperative incentives (short-term types). In this article, we formalize Posner's theory in a signalling trust game, derive hypotheses from our model, and test them empirically in a series of laboratory experiments in the United Kingdom, Russia, and Switzerland. Our results are surprisingly robust across the three countries and in line with most of our hypotheses. However, contrary to our main hypothesis, the introduction of a signalling opportunity does not increase the overall level of trust in our experiments and even reduces it under certain conditions. We argue that this is due to a high proportion of short-term types honouring trust because of non-selfish motives. Our results show that if a priori levels of trust and trustworthiness are high, introducing a signalling opportunity that is meant to distinguish long-term and short-term types may have a counterproductive effect.