Socioeconomic status, reputation, and interpersonal trust in peer-to-peer markets: Evidence from an online experiment

Abstract

Online peer-to-peer markets decentralize the distribution of resources, creating a trust problem in economic exchange on the internet. Individual characteristics of trustees — as determinants for being trusted — are therefore increasingly important. In light of this societal development, this study investigates the role of socioeconomic status and reputation as drivers of interpersonal trust. Some have argued that lower status trustees are trusted more easily because over the life course, they repeatedly rely on others' resources. Others state that higher status trustees are perceived as being more trustworthy, because they are more vulnerable to social control and loss of reputation. We propose a novel, experimental method for examining interpersonal trust situations that resembles the reality of peer-to-peer market platforms. 626 subjects in an online experiment were asked to place trust in their preferable trustee based on the asking price, and seller characteristics. The results from conditional logistic regression models showed that status increases perceived trustworthiness and positively affects the trust premium for past trustworthy behavior. Strong reputation effects were found, sending out a warning for inequitable emergent inequality of trust through reputation cascading.