What fosters more trust: gifts or words?
Words may be better than expensive gifts:
Should one use words or money to foster trust of the other party if no means of enforcing trustworthiness are available? This paper reports an experiment studying the effectiveness of two types of mechanisms for promoting trust: a costly gift and a costless message as well as their mutual interaction. We nest our findings in the standard version of the investment game. Our data provide evidence that while both stand-alone mechanisms enhance trust, a gift performs significantly worse than a message. Moreover, when a gift is combined with sending a message, it can be counterproductive.
Source: Words speak louder than money” from Journal of Economic Psychology, Volume 32, Issue 5, October 2011, Pages 700-709
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