Using Experimental Economics to Measure Social Capital And Predict Financial Decisions

Dean Karlan

Working Papers from Economic Growth Center, Yale University

Abstract: Questions remain as to whether results from experimental economics games are generalizable to real decisions in non-laboratory settings. Furthermore, important questions persist about whether social capital can help solve seemingly missing credit markets. I conduct two experiments, a Trust game and a Public Goods game, and a survey to measure social capital. I then examine whether behavior in the games predicts repayment of loans to a Peruvian group lending microfinance program. Since the structure of these loans relies heavily on social capital to enforce repayment, this is a relevant and important test of the games, as well as of other measures of social capital. I find that individuals identified as "trustworthy" by the Trust game are in fact less likely to default on their loans. I do not find similar support for the Trust game as a measure of trust.

Keywords: trust game; experimental economics; microfinance (search for similar items in EconPapers)
JEL-codes: B4 C9 D8 O1 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-04
New Economics Papers: this item is included in nep-cbe, nep-dev, nep-exp, nep-mfd and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (532)

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http://www.econ.yale.edu/growth_pdf/cdp909.pdf (application/pdf)

Related works:
Journal Article: Using Experimental Economics to Measure Social Capital and Predict Financial Decisions (2005)
Working Paper: Using Experimental Economics to Measure Social Capital and Predict Financial Decisions (2005)
Working Paper: Using Experimental Economics to Measure Social Capital and Predict Financial Decisions (2005)
Working Paper: Using experimental economics to measure social capital and predict financial decisions (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:egc:wpaper:909

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