In the trust game
A) Game theory tells us that trustees will be untrustworthy and trustees will forego potentially profitable investments
B) Both players divides up the principle and earnings together
C) One player (the trustee) decides both how much money to invest and how the principle and earnings are divided between himself and the other players
D) Both players decide how much to invest together

Question

Quizplus · Accepted Answer

In the trust game, according to game theory, the rational strategy for trustees (who are given the investment to manage) is to act in their own self-interest, which often means being untrustworthy and foregoing potentially profitable investments that would benefit both parties. This is because the trustee, who receives the investment, has no enforceable obligation to return any of the profits to the investor, leading to a prediction of untrustworthiness.

In the Trust Game