Trust and social preferences: A cross-cultural experiment

Abstract

This paper reports the results of a cross-cultural laboratory experiment with subjects from a low-income country (Mozambique), a middle-income country (Brazil), and a high-income country (Germany). Our goal was to investigate differences in social preferences when a person knows that his or her counterpart is either from a much poorer or a much richer country. We conducted a trust game and a dictator game with Brazilians as first movers and, contrary to the trust game literature, we observed no in-group favoritism. Brazilian subjects transferred significantly more to both Mozambican and German subjects than to other Brazilians. When facing Mozambican subjects, Brazilians sent similar average amounts in the dictator game and trust game, but they significantly reduced the amount sent to Germans in the dictator game relative to transfers made in the trust game. The combination of these results and the responses given by first movers in the post-experiment survey support the hypothesis that subjects from middle-income countries expect subjects from high-income countries to be reciprocal, but at the same time, they are not particularly generous toward them. By contrast, they use any opportunity available to increase the material payoff of subjects from a very low-income country, even though there is little evidence that they expect reciprocity from them.