Thomas Gautschi
Is No News Bad News? A Hostage Trust Game with Incomplete Information and Fairness Considerations of the Trustee
Abstract: The Trust Game is often used to illustrate cooperation problems in situations of sequential exchange where one actor runs the risk of losing a possible initial investment (i.e., trust is abused if placed). The Hostage Trust Game is an extension of this simple scenario that allows for (binding) commitments by the second actor, which should facilitate an investment by the first actor. If no hostage is placed by the second actor, however, the Trust Game and the Hostage Trust Game are identical. Under complete and perfect information, outcomes in the two games must thus be identical if assuming rational utility-maximizing ...
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