Wieland Müller speaks about "Building trust: The costs and benefits of gradualism" (joint work with Melis Kartal and James Tremewan) at the University of Economics, Prague, on October 31, 2019.

Abstract:
To study the development 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.