The Effects of Tournament Incentives on Trust

We examine the impact of tournament incentives on trust behavior in subsequent investment environment. In this paper, we adopt the research paradigm of a trust game designed by Joyce Berg, John Dickhaut, and Kevin McCabe (1995). We hypothesize that tournament incentive, which emphasizes competition and entitlements, can influence individual's follow-up. In our experiment, the initial investment amount of 10 yuan is obtained from the tournament exam. In the subsequent trust game experiment, the randomly assigned "sender" has the right to use the 10 yuan. Our study finds that participants' investment decisions vary widely, but almost all decisions are contrary to "rational" predictions. Most importantly, when we are more concerned about the relative performance of the participants, the difference in trust behavior is manifested. As the incentive of the tournament influences the cognition of the property right and investment environment, the relative performance and trust of the participants show a linear negative correlation trend.