Abstract
We report results from a trust-game experiment comparing behavior in an institution in which relationships end at a definite time, terminating concern for the future, with behavior in an institution in which relationships end at an indefinite time, inducing concern for the future. Although the level of trust was the same in both institutions when subjects were inexperienced, it fell in the definite but not indefinite institution as subjects gained experience. The divergence in efficiency can be explained by the institutions’ initial effect on repeated-game strategies and by the evolution of these strategies over time in a best response manner.
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