Article

 

"It won't happen to me": Is there a link between trust and optimism?  (p.79-98)

by

Yuri V. Avtonomov, National Research University Higher School of Economics, Moscow

Elizaveta T. Elizarova, International College of Economics and Finance, Moscow

Keywords : Trust, Trustworthiness, Expectations, Experiment, Optimism bias

JEL classification : D84, Z13

Abstract

The importance of trust in facilitating economic interactions and its contribution to social welfare gives economists ample reasons to study trust. However, despite a long history of experimental studies of trust, its determinants are still not completely clear. We report evidence from an experimental study which suggests the existence of an optimism bias: players expect their partners to be more trustworthy than the average member of the population. This bias was positively and statistically significantly related to players' decision to trust. Our data also indicates a positive relation between the player's decision to trust and her expectations about the overall trust level: players who trusted their partners also believed that other players would trust more often.