Essay
(a) Describe the "trust game" introduced by Berg, Dickhaut and McCabe (1995). If people are purely payoff maximisers then what is the equilibrium prediction in this game using backward induction?
(b) Suppose I designed an experiment where participants take part in two games: (i) the trust game that you have described above and (ii) the triple dictator game. In the triple dictator game players are paired up and each player is given $10.00. Then the first mover is told that he can send some or all of his $10.00 to the second mover. Any amount sent is tripled by the experimenter. The second mover is given this tripled amount but does not have any decision to make. Suppose I find that amounts sent in the trust game are not significantly different from those sent in the triple dictator game. Briefly explain what conclusions I can draw from this behaviour.
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