x

NEW UPDATE: Completed trials may now upload and register supplementary documents (e.g. null results reports, populated pre-analysis plans, or post-trial results reports) in the Post Trial section under Reports, Papers, & Other Materials.
Is interpersonal trust derived from formal institutions or from social norms?
Last registered on January 22, 2020

Pre-Trial

Trial Information
General Information
Title
Is interpersonal trust derived from formal institutions or from social norms?
RCT ID
AEARCTR-0005289
Initial registration date
January 21, 2020
Last updated
January 22, 2020 11:11 AM EST
Location(s)
Primary Investigator
Affiliation
Universidad Privada Boliviana
Other Primary Investigator(s)
PI Affiliation
Universidad Privada Boliviana
PI Affiliation
Universidad Privada Boliviana
Additional Trial Information
Status
In development
Start date
2020-01-06
End date
2020-12-11
Secondary IDs
Abstract
In developing economies, commercial transactions frequently occur within the informal economy, with often surprising degrees of contractual complexity. By its nonlegal nature, informal contracts will rarely be enforced by Law, and hence contacts depend on inter-personal trust between contracting agents. Interpersonal trust can stem from different sources: education, culture, history, etc. We posit that interpersonal trust, mostly in what relates to commerce, depends on institutions, and that unofficial institutions regulating informal markets, such as merchant’s associations, can be a source of trust. In context of extreme degrees of informality in the economy, and of weak official institutions, such as in Bolivia, inter-personal trust might emanate more form unofficial than from official sources.
This experiment intends to measure interpersonal trust based upon Berg’s experiment (1995), in which the game is slightly modified by allowing trustors to object the result of the game by appealing to and arbitrage institution. The arbitrage institution is randomly allocated to the players as an official institution (a court of justice) or an unofficial one (a merchants’ association). We hypothesize that in the Bolivian context, unofficial institutions are more conductive to improved levels of interpersonal trust.
External Link(s)
Registration Citation
Citation
Chumacero, Mauricio, Joaquin Morales and Soraya Roman. 2020. "Is interpersonal trust derived from formal institutions or from social norms?." AEA RCT Registry. January 22. https://doi.org/10.1257/rct.5289-1.0.
Experimental Details
Interventions
Intervention(s)
We plan to implement a lab-in-the-field trust experiment. Merchants and workers from informal commercial zones in La Paz (Bolivia) will be invited to play a modified version of the investment game (Berg et al 1995), i.e. they will be separated in two groups and one of them will be asked to give money or "invest in" the other at the promise they will return the investment with interests. We will use a factorial design with two treatment arms. The first treatment arm consists of revealing beforehand investors cannot appeal at all or can appeal to one of two institutions - formal or informal - if they believe investment returns were unfair. The second treatment arm models a “lax” or “severe” payment structure: appealing the results of the game can be either costly with high compensation, or cheap with low compensation. We test whether interpersonal trust changes by introducing each of these institutions and rules and comparing them. Then, we collect data on participants ’perceptions, risk aversion, loss aversion and local associations characteristics to explore if variables such as organizational capacity, the reputation of fair ruling and proximity are correlated with treatment effects.
Intervention Start Date
2020-05-04
Intervention End Date
2020-08-14
Primary Outcomes
Primary Outcomes (end points)
interpersonal trust derived from trust in institutions
Primary Outcomes (explanation)
Interpersonal trust is measured by the amount an investor sends to the trustee, as in Berg et al (1995)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The experiment builds on the trust game designed by Berg et al. (1995), which will be implemented as a framed field experiment with an institutional variation treatment. This means we intend to implement the game in the natural working space of our study subjects: spaces available in merchants’ market zones. The experiment has a 3x2 between-subject factorial design. For the first treatment arm, we use the experiment of Berg et al. (1995) as a baseline treatment and then we test whether giving the opportunity to appeal the results of the game to a particular institution increases or decreases the level of trust, measured by the amount sent by the trustor. The institution can be formal, i.e. a commercial court, or informal, i.e. “tribunals of honor”. For the second treatment arm, we institute a “severe” and a “lax” treatment : appealing the results of the game can be either costly with a high compensation in case of a favorable ruling for the plaintiff, or cheap with a low compensation in case of a favorable ruling for the plaintiff. So, our experiment has five treatments in total: a control group, an informal institution with severe rulers, an informal institution with lax rules, a formal institution with severe rules and a formal institution with lax rules.

Our experimental procedure has two parts. First, subjects are submitted to specific rooms (room A and B) to play the modified trust game with institutions. Then, they are asked to fill out a small questionnaire after the experiment.

We consider Berg et al. (1995)’s trust game with initial endowments as baseline treatment, where two groups of agents are sent to two different rooms: A and B. The game proceeds as follows:

1. Subjects from room A (trustors) are given an amount Rwhereas subjects from room B (trustees) receive an amount S. Both subjects know each is receiving some amount of money at the beginning.
2. Subjects in A choose to send some, nothing or everything of it to subjects in room B (trustees).
3. We triple whatever amount subjects A sent and deliver it to subjects in room B.
4. Subjects in B choose to send: some, nothing or everything of the money they received from A.

The idea of giving an initial endowment to both players is to reduce the effect of aversion to inequality (Calabuig et. al. 2016).

Experimental Design Details
Not available
Randomization Method
Randomization will be done in site by a computer
Randomization Unit
Market merchants of the North Zone of La Paz city, Bolivia.
Was the treatment clustered?
No
Experiment Characteristics
Sample size: planned number of clusters
N/A
Sample size: planned number of observations
400 individuals
Sample size (or number of clusters) by treatment arms
80 individuals per treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
0.25 SD for each treatment. 0.95 Confidence level
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Comité de Ética y Transparencia de la Universidad Privada Boliviana
IRB Approval Date
2019-12-24
IRB Approval Number
CET-02122019