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An International Investigation of the Influence of Social Distance on Trust.

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1 An International Investigation of the Influence of Social Distance on Trust

2 Let’s Get Personal: An International Examination of the Influence of Communication, Culture and Social Distance on Trust and Trustworthiness Nancy R. Buchan – Univ. of Wisconsin Rachel T.A. Croson – Univ. of Pennsylvania Eric J. Johnson – Columbia University

3 Goal of Research How does trust manifest itself in different countries and different contexts?  Four countries China, Japan, Korea, United States  Two cultural orientations  Social Distance  Personal vs. Impersonal Communication

4 Perspective: Experimental Economics The Trust Game (Berg, Dickhaut & McCabe 1995)  Standard trust game  Both parties receive $10 participation fee  Amount sent is tripled, responder is a dictator with total  One-shot, real money  Deviations from equilibrium – trust, trustworthiness

5 The Influence of Social Distance Need to incorporate social distance to explain individual decisions bearing social consequences (Akerlof 1997)  Definition: Location in a social space (Akerlof 1997) Degree of isolation from each other and experimenter (Hoffman, McCabe and Smith 1996) Demographic similarity (Glaeser et al. 2000)

6 Social Distance and Culture Minimal Group Paradigm (Tajfel et al. 1971)  Arbitrary categorization into mutually exclusive groups  Significant ingroup bias in the United States (Orbell, van de Kragt & Dawes 1988; Frey & Bohnet 1997) The Influence of Culture on Group Definition and Formation  Permanent / Natural groups vs. Temporary / Artificial (Triandis 1995)  Likely resistance from collectively oriented participants (Mann, Radford, & Kanagawa 1985)

7 Social Distance and Culture Hypothesis (tested at the aggregate and individual levels):  Countries (US) / Individuals with relatively more individualist orientation will display an ingroup bias.  Countries (China, Japan, Korea) / Individuals with relatively more collectivist orientation will not display an ingroup bias.

8 The Influence of Communication Communication increases cooperation rates in SDs (Sally 1995)  Why?  Must communication be strategy-relevant? Irrelevant communication (“cheap talk”)  Roth (1995): 2-min., face to face, social discussion Led to same amounts of increase in cooperation as relevant communication  Dawes, McTavish, & Shaklee (1977): 10-min., face to face, fact-related discussion Led to same amount of cooperation as no communication

9 Irrelevant Content Compare 2 types of irrelevant communication  Personal  Impersonal Hypothesis:  Among in-group pairings, participants who engage in personal communication will display higher levels of trust and trustworthiness than those who engage in impersonal communication.

10 Experiment Participants 188 Ss – sophomore or junior business or economics majors  50 Ss: Nankai University – China  50 Ss: Seoul National University – Korea  44 Ss: University of Tokyo – Japan  44 Ss: University of Pennsylvania - US

11 Experiment Procedures - Communication Participants randomly assigned to one of four color-coded groups (~ 12 members)  Personal communication: Ss told to introduce themselves and to discuss, from a list provided, a question pertaining to their birthdays  Impersonal communication: Ss told to answer from the given list, questions obtained from the world almanac

12 Experiment Procedures – Trust Game Participants randomly assigned to roles (sender / responder), and directed to separate rooms Received written instructions for game, experimental fee, and 2 colored index cards  Numbered card represented color of Ss own discussion group, and ID number  Blank card represented color of partner’s discussion group

13 Experimental Procedures Double-blind Controls (Roth et al. 1999):  Ss pool equivalency  Currency effects: 2,000 yen, 1,000 won, 10 yuan, $10 dollars  Language effects  Experimenter effects  Comprehension

14 Experimental Questionnaire Senders: Completed after sending money but before receiving any back Responders: Completed before receiving money from senders Hypothetical games (next study)

15 Measures of Cultural Orientation Cultural orientation: Broad measures of culture reflecting two fundamental differences in culture (Hofstede 1980; Triandis et al. 1988) Competition vs. Cooperation  “To what extent does it feel like you are competing or cooperating with the responder (sender) in this experiment?” Priority on self vs. group  “What is more important to you in this experiment, maximizing the amount of money that you and the (sender) responder will gain, or maximizing the amount of money you alone will gain?”

16 Experimental Results Dependent Variables:  Trust: Amount sent by sender  Trustworthiness: Proportion of total wealth returned by responder Monetary amounts across countries standardized on scale from 0 to 1,000 units

17 Amount Sent

18 Country x Social Distance

19 Cultural Orientation

20 Cultural Orientation x Social Distance

21 Cultural mediation

22 Communication – Main effect

23 Proportion Returned

24 Country x Social Distance

25 Cultural Orientation x Social Distance

26 Cultural Mediation

27 Effect of Communication

28 Discussion The interaction of cultural orientation with social distance  Culturally influenced definitions and methods of group formation may moderate extent to which ingroup bias in trust is demonstrated (see also Buchan, Croson & Dawes, AJS, 2002)  Implications for research methods used

29 Discussion The content of non-strategy relevant communication influences the level of trust displayed 3 explanations for this result:  Social Distance (Hoffman, McCabe & Smith 1996) Decreasing social distance = higher trust  Social Identity (Brewer 1991; Tyler and Dawes 1993) Group identity increases expectations that members of ingroup will return money

30 Discussion Proposed explanation for communication effect  Personal communication prompts greater “otherregardingness” (Bohnet & Frey 1999) Examination of outgroup results reveals “carryover” effect of communication A representative heuristic at play? (Kahneman & Tversky 1972)

31 Conclusion “Cheap Talk” isn’t so cheap Our results regarding trust and trustworthiness concur with Schelling (1968) who suggested, the more we know, the more likely we are to care.

32 The Boundaries of Trust: Own and Others’ Actions in the US and China Nancy R. Buchan, University of Wisconsin Rachel T.A. Croson, University of Pennsylvania

33 Exploring the Boundaries of Trust Putting Fukuyama’s ideas to test (1995)  Trust levels vary by country – US > China  Location of trust boundary varies by country US boundary is wide – including non-kin China boundary is close and tight – limited to family members Trust: “…the expectation of cooperative behavior based on commonly shared norms.”

34 Trust Games with Hypothetical Targets Examining trust and trustworthiness within naturally occurring social networks 7 targets varying in social distance (similar to Kollock 1998)  Parent  Sibling  Cousin  Student know well  Student from another university  Stranger from hometown  Stranger from another country

35 Intentions and Expectations 2 types of measures collected:  Intention  Expectation  Senders: “Imagine you were doing this experiment with the following responders. Please state how much you would send the responder, and how much you would expect to receive back from the responder.”  Responders: “Imagine you were doing this experiment with the following senders. Please state how much you would expect to receive from the sender, and how much you would return to them.” Measures elicited during play of actual trust game Focusing on China and the US since they represent Fukuyama’s starkest predictions.

36 Social Distance Hypothesis Although decreases in trust and trustworthiness are expected as social distance increases for both American and Chinese participants, the drop in levels of trust and trustworthiness among Chinese participants between family and non- family members will be significantly greater than the drop in trust and trustworthiness among American participants.

37 Social Norm Hypothesis Ostrom (2003): “Once some members of a population acquire norms of behavior, the presence of these norms affect the expectations of other players,” (p.41). Expectations of the trusting actions of others will decrease as social distance increases in both the US and in China. Expectations of the trustworthy actions of others will decrease as social distance increases in both the US and in China.

38 Method of Analysis Mixed-model repeated ANOVA Amounts sent standardized scale 1-10 units Converted absolute amounts returned to proportions returned. Covariates:  Exposure to game theory  Gender – replicating prior results (Croson and Buchan AER 1999, previous study)

39 Comparison with Actual Game Actual game: participants paired with anonymous student from same university Hypothetical: Between “Student you know well,” and “Student from another university”

40 Amount Sent – Sender’s Intentions As social distance increases, amounts sent decrease (F(7,308)=70.17, p<.01) China’s tighter boundary of trust?  No social distance x target interaction

41 Amount Sent – Responder's Expectations As social distance increases, expectations decrease (F(7,315)=36.6, p<.01) Significant country x recipient interaction (F(7,315)=10.64, p<.01)

42 Proportion Returned – Responder’s Intentions As social distance increases, amounts sent decrease (F(7,315)=20.06, p<.01) China’s tighter boundary of trust?  Again, no social distance x target interaction

43 Proportion Returned – Sender’s Expectations Significant country x recipient interaction (F(7,308)=8.72, p<.01)

44 What do these interactions mean? Directly compare the actions senders or responders report they would take with the expectations about those actions from responders or senders. Analysis: Repeated measures anovas using intentions and expectations as the DV, role as the IV (for both sending and returning)

45 US Comparison

46 No significant effect of role for either sending or returning – thus the levels of lines are the same. Significant effect of counterpart for both sending and returning – thus the slopes of the lines are significant and negative. Interactions are not significant – the slopes of the lines are the same as each other. Strong relationship between intended behaviors and expectations in US.

47 China - Comparison

48 China Comparison Significant interactions for both sending and returning – the slopes of the lines are the different from each other. Intended actions are more responsive to social distance than expectations. Weak relationship between intended actions and expectations in China.

49 Discussion Lack of support for Fukuyama’s tighter boundary of trust in China Strong support for influence of social distance in both countries among natural groups  Counterpoint to findings in previous studies with experimental groups Stresses the importance of (embeddedness in) personal networks of relationships in building trust (Granovetter 1985)  Trust in China can occur outside kin (despite “bamboo network”) 3 categories of interpersonal relationships based on expressive, instrumental, or mixed ties (Bond and Hwang 1995)

50 The connection between own and other’s actions US: Responders’ expectations about proposers’ reactions to social distance are consistent with proposers’ actual reactions, and vice versa. China: Expectations are systematically less consistent.  Actors are sensitive to social distance, but neither expects the other side to be.

51 Role of Norms Apriori expectations:  In collectivist cultures strict norms governing behavior in different contexts (Bond & Hwang 1986); adherence to norm demanded (Bierbrauer et al. 1994).  In individualist cultures, variety of norms is tolerated (Bierbrauer et al. 1994). Test of variances yields no distinct pattern

52 Comparison of Individual’s Own Actions with His Expectations Correlation analysis: What a proposer says he will send to each counterpart vs. what he expects to receive from each.

53 Data from Actual Game Correlation analysis: What proposers sent vs. what they expected to receive back. US: r =.794, p<.01 China: r =.384, p<.09

54 Possible Explanations Projection (Dawes, McTavish & Shaklee 1977)  Americans are more likely than Chinese to project own behavior onto others in situations involving possibility of cooperation. Avoidance of “Renqin” (King 1991)  If you do not wish to be indebted to others, you do not expect favors from them.

55 Implications of micalibration Central premise in trust research: trust is based on positive expectations of reciprocity (Rousseau et al. 1998)  Perhaps there are motivations for trust other than expectations of reciprocity.  Or, possibly the strength of expectations as a motivation for cooperative behavior varies across countries.

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