When trustors compete for the favour of a trustee – A laboratory experiment

We experimentally compare standard two-player trust games to three-player trust games, where two trustors compete for one trustee. We argue that a competitive environment could affect how the trustors’ behaviour is perceived by the trustee. If two trustors compete for the favour of a trustee, the trustee might find it difficult to interpret the trustors’ investments as kind since they could as well be the outcome of a competitive race; this could negatively affect the trustee’s returned amount. We allow for heterogeneous effects of competition for strangers and artificially induced partners. The results of our one-shot trust games show that introducing competition among trustors reduces return ratios of the trustee. We do not find any evidence for statistically different effects of competition for partners and strangers.

► We analyze the effect of competing trustors on return behaviour of trustees.
► Investments might either be interpreted as kind or as the outcome of competition.
► We allow for heterogeneous effects of competition for strangers and partners.
► Introducing competition among trustors reduces return ratios of the trustee.
► We do not find different effects of competition for partners and strangers.