HKS Authors

See citation below for complete author information.

Academic Dean
Albert Pratt Professor of Business and Government
Co-Director, Women and Public Policy Program

Abstract

Why is private investment so low in Gulf compared to Western countries? We investigate cross-regional differences in trust and reference points for trustworthiness as possible factors. Experiments controlling for cross-regional differences in institutions and beliefs about trustworthiness reveal that Gulf citizens pay much more than Westerners to avoid trusting, and hardly respond when returns to trusting change. These differences can be explained by subjects' gain/loss utility relative to their region's reference point for trustworthiness. The relation-based production of trust in the Gulf induces higher levels of trustworthiness, albeit within groups, than the rule-based interactions prevalent in the West.

Citation

Bohnet, Iris, Benedikt Herrmann, and Richard Zeckhauser. "Trust and the Reference Points for Trustworthiness in Gulf and Western Countries." Quarterly Journal of Economics 125.2 (May 2010): 811-828.