Lecture 1

Question 1

Goals of Lecture 1

Answer 1

• Understand key terms and concepts related to
  (dis)trust in a game theory context
• Describe strategic interactions and their impact on
  trust and cooperation
• Use real-life case studies to identify how game
  theory can explain the building of trust

Question 2

The Public Goods Experiment

Answer 2

• Groups are given an initial stake (10€ each)
• Individuals decide how much to contribute to a public
  goods project
• Contributions are doubled and distributed equally
• Dilemma: maximize personal return or cooperate for
  collective benefit?

Question 3

PERSONALITY

Answer 3

Study by Becker et al. (2020) on personality traits in economic games

Personality includes
⚬ Big 5 / OCEAN continua:

￭ Openness (curiousness and inventiveness vs. consistent and cautious)

￭ Conscientiousness (efficient and organized vs. extravagant and careless)

￭ Extraversion (outgoing and energic vs. solitary and reserved)

￭ Agreeableness (friendly and compassionate vs. critical and rational)

￭ Neuroticism (sensitive and nervous vs. resilient and confident)

Question 4

PERSONALITY

Study by Becker et al. (2020) on personality traits in economic games

Answer 4

• If Player 1 collaborates, this brings a higher chance of collaboration
• In terms of personality, agreeableness is a predictor of collaboration in these games

Question 5

TAKE HOME from lecture 1 and 2

Answer 5

• Game theory is interesting to model theoretical yet concrete strategic interactions
• Homo economicus is not who we are
• Repetition, socio-economic background, and personality play a part in how we
  collaborate
• Next week, we discuss some of the roots behind why we trust people

Question 6

Homo Economicus:

Answer 6

This is a concept in economics that assumes individuals act purely rationally and in their own self-interest to maximize utility. However, this is an idealized notion and doesn’t fully capture human behavior.

Real Human Behavior: In reality, factors such as repetition of interactions, socio-economic background, and personality significantly influence how people collaborate and trust each other. Humans are not always purely rational and their decisions are often influenced by past experiences, social context, and inherent traits

Question 7

Influence of Repetition, Socio-Economic Background, and Personality:

Answer 7

Repetition:

Repeated interactions between the same participants can build trust over time as individuals learn about each other’s behavior and build a history of cooperation.

Socio-Economic Background:

People’s backgrounds can shape their attitudes towards trust and cooperation. For instance, individuals from more collaborative environments may be more inclined to trust others.

Personality:

Individual differences, such as tendencies towards risk aversion or openness to trust, play a crucial role in how trust is established and maintained in strategic interactions.