Phase 1

Down the Rabbit Hole

The Puzzle

Traditional game theory says no one should trust strangers with their money. The rational move is to keep it. Yet in Berg, Dickhaut, & McCabe's (1995) Trust Game, people invest. Consistently. Across cultures.

Why? The literature offered two main explanations:

Social Preferences

Altruism, reciprocity, fairness norms—we trust because we care about others.

Risk Attitudes

Different perceptions of uncertainty—maybe trust is just how we handle social risk.

The Confusion

The literature is full of contradictory findings. Two main problems emerged:

Prediction vs. No Prediction

Some studies find risk preferences predict trust. Others find they don't.

Houser et al. (2010) vs. Schechter (2007)

Exceeds vs. Does Not Exceed

Some find trust levels exceed risk taking. Others find risk taking exceeds trust.

Bohnet & Zeckhauser (2004) vs. Rățală et al. (2019)

Then I Saw It

I started tracking what each study actually did. Not what they concluded—what they measured. Two methodological problems kept appearing:

Different Stakes & Probabilities

Stakes and probability ranges varied wildly. Some used $5 bets, others $100. Some tested 10% vs 90% probabilities, others 40% vs 60%.

Insight: Prospect Theory has different parameters for different contexts. Maybe they were testing different parts of the curve?

Mismatched Uncertainty

Studies were comparing apples to oranges. In risk, you know the dice is fair (Known Probabilities). In trust, you have no idea (Ambiguity).

Insight: These are fundamentally different types of uncertainty. We need to control for this.

The Breakthrough Question

Can Prospect Theory—the Nobel Prize-winning framework for risk—explain trust behavior when we properly control for stakes, probabilities, and uncertainty levels?

This became the thesis