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Schechter, L. (2007). raditional trust measurement and the risk confound: An experiment in rural Paraguay. Journal of Economic Behavior & Organization 62 (2), 272-292

Play in the traditional trust experiment depends both on trust beliefs and on levels of risk aversion. We ran two experiments with a diverse set of subjects in 15 villages of rural Paraguay, the traditional trust experiment and a new experiment measuring only risk aversion. We find that risk attitudes are highly predictive of play in the trust game. In addition, omitting risk aversion as a regressor in trust regressions significantly changes the coefficients of important explanatory variables such as gender and wealth.


Schechter, Laura

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