TY  - RPRT
        AU  - Costa-Gomes, Miguel A.
AU  - Huck, Steffen
AU  - Weizsäcker, Georg
        TI  - Beliefs and Actions in the Trust Game: Creating Instrumental Variables to Estimate the Causal Effect
        PY  - 2010/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 4709
        UR  - https://www.iza.org/publications/dp4709
        AB  - In many economic contexts, an elusive variable of interest is the agent's expectation about relevant events, e.g. about other agents' behavior. Recent experimental studies as well as surveys have asked participants to state their beliefs explicitly, but little is known about the causal relation between beliefs and other behavioral variables. This paper discusses the possibility of creating exogenous instrumental variables for belief statements, by shifting the probabilities of the relevant events. We conduct trust game experiments where the amount sent back by the second player (trustee) is exogenously varied by a random process, in a way that informs only the first player (trustor) about the realized variation. The procedure allows detecting causal links from beliefs to actions under plausible assumptions. The IV estimates indicate a significant causal effect, comparable to the connection between beliefs and actions that is suggested by OLS analyses.
        KW  - social capital
KW  - trust game
KW  - instrumental variables
KW  - belief elicitation
        ER  -