Fehr and Rockenbach conducted a study that allowed first movers in the trust game to specify a "back transfer" for the second movers and also allowed the first movers to impose a penalty on the second movers if and when the second mover sent back less than the "back transfer" specified by the first mover. Which of the following is an accurate description of their results?
A) On average, the second movers return nearly 75% of the desired "back-transfer" in the trust treatment (where no fine is available to the sender) , as well as the treatment where the sender could have imposed the fine but chose not to do so. Second movers return 55% in the treatment where the first movers make explicit use of the penalty.
B) On average, the second movers return much less (around 55%) in the treatment where the sender could have imposed the fine but chose not to do so. Second movers return more (around 75%) in the treatment where the first movers make explicit use of the penalty.
C) On average, the second movers return nearly 75% of the desired "back-transfer" in the trust treatment (where no fine is available to the sender) , but return much less (around 55%) when the first mover had the option of imposing a penalty but chose not to do so.
D) On average, the second movers return around 75% of the desired "back-transfer" in all three treatments: The trust treatment, where no fine is available to the sender, the incentive treatment, where the sender could have imposed the fine but chose not to do so and the incentive treatment, where the first movers make explicit use of the penalty.
Correct Answer:
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