Wieland Müller speaks at the University of Birmingham

Wieland Müller gives a talk on “The Costs and Benefits of Gradualism” (joint work with Melis Kartal and James Tremewan) at the University of Birmingham on March 14.

Abstract:
To study the evolution of trust, we examine a setting with an infinite horizon, uncertainty regarding the trustworthiness of receivers, and various levels of trust. In equilibrium, senders gradually increase trust levels with reciprocating receivers. We find strong experimental evidence of such gradualist strategies. However, comparing this setting to one in which trust is an all-or-nothing decision, we find in stark contrast to theory, that the latter leads to more efficient outcomes. In a series of follow-up experiments, we highlight the role of homemade beliefs and identify circumstances in which gradual strategies are not only used but also more efficient. We provide a possible interpretation of our results, arguing that gradualism might be costly or beneficial depending on the level of social capital prevalent in a (lab) society.