On the relational aspects of trust and trustworthiness: Results from a laboratory experiment

Do we trust better-connected people more than others and are those who are better connected more trustworthy? Interaction in social networks affects trust as it helps reduce informational asymmetries and identify those whom to trust. It also provides channels for reciprocity where trustworthiness emerges as a relational rather than individual characteristic. We run a laboratory experiment in which trustors decide on how to allocate their endowment to five trustees both before and after a network formation phase. Our results show that trustors are influenced by the behaviour of trustees in the network formation phase: when the allocation is chosen after networks have been formed, trust is directed towards the most frequent connections of the trustor. However, when trustors' offers are anonymous, such increased trust is not reciprocated by trustees. This suggests that social connections do not signal a greater individual propensity to reciprocate trust, but rather provide channels for reciprocity which can only be activated when both trust and trustworthiness are not anonymous.