The effect of third party intervention in the trust game

The literature suggests that in the trust game setting a third party may have an impact on trust and trustworthiness. This may be done through monitoring alone, as well as through punishment or reward. We examine the impact of these three factors in both fixed and random partner settings. We find evidence that third party intervention is sensitive to participant actions and can result in changes in investment and return behavior, although not necessarily in the intended direction. Despite this individual impact, adding punishment or reward capabilities to the third party monitor has no significant effect in the aggregate. The increase in contributions in the presence of a third party can primarily be attributed to third party monitoring.