Building trust: The costs and benefits of gradualism abstract:examine the prevalence of gradualist strategies and their effect on trust-building and
economic gains in a setting with an infinite horizon, asymmetric information regarding the
trustworthiness of receivers, and various levels of trust. The theoretical literature suggests
that gradualist strategies mitigate asymmetric information problems and foster trustbuilding. However, we theoretically and experimentally show that gradualism sometimes
reduces joint payoffs relative to a simple “binary” setting in which trust is an all-or-nothing
decision. In a series of experiments, we vary the degree of asymmetric information as well
as the economic returns to trusting behavior, and delineate circumstances under which
gradualism may promote or curb efficiency.


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