Plausible Deniability and Cooperation in Trust Games

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What motivates agents to choose pro-social but dominated actions in principal-agent interactions like the trust game? We investigate this by exploring the role higher-order beliefs about payoffs play in an incentivized laboratory experiment. We consider a variety of ways of distributing higher order information about payoffs, including an asymmetrical distribution that generates "plausible deniability": one agent (B) knows the other (A) doesn't know that B knows how A's payoffs are impacted by B's actions. Agents, in turn, exploit this: otherwise trustworthy types are tempted into defecting when they have plausible deniability.

Original languageEnglish (US)
Pages (from-to)95-118
Number of pages24
JournalReview of Behavioral Economics
Issue number2
StatePublished - 2019


  • behavioral economics
  • guilt aversion
  • higher order beliefs
  • reciprocity
  • social preferences
  • Trust
  • trust game

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)
  • Social Psychology
  • Social Sciences (miscellaneous)


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