Expansion of Exchange

Abstract

Three experiments employed procedures which allowed trust levels to be continuously monitored during ongoing two-party exchange. Level of trust was behaviorally defined by degree of "expansion" of exchange-that is, by how far ahead in earnings one party put the other. Higher levels of trust were increasingly risky because they resulted in proportionately greater earnings reductions when the other person was untrustworthy (failed to reciprocate). Consistent with Blau's (1964, 1968) theoretical descriptions of the development of trust and expanded exchange, trust levels increased gradually in most pairs, even in a procedure (Alternation Cost) which made low trust levels costly. Two manipulations (Time Uncertainty and Exchange Uncertainty) which made it uncertain whether the other person would be able to reciprocate produced dramatic decreases in trust. A third manipulation (Temptation), which made it uncertain whether the other person would choose to reciprocate, had similar effects. The combination of a reduced likelihood of reciprocation and Alternation Cost produced intermediate reductions in trust levels in some pairs and a cessation of exchange in others.