Trust as a decision under ambiguity: Does race matter?

This paper examines the role of ambiguity attitudes in shaping trust decisions. Traditional trust games often ignore or conflate the role of risk and ambiguity, though trust decisions typically involve the latter. Using a refined trust game and data from 328 participants in South Africa, we replicate in a developing country context recent work by Li et al. (2019) investigating how ambiguity aversion and insensitivity shape trust behaviour. Further, given findings of in-group bias in trust game decisions, including racial bias in studies in South Africa, we examine the interaction between ambiguity attitudes and race. Our findings reveal that ambiguity aversion significantly diminishes the propensity to trust, while likelihood insensitivity does not notably affect trust decisions. Additionally, while we do not see explicit bias in trust decisions (black and white trustees receive the same level of trust from decision makers), we note that the link between ambiguity-aversion and diminished trust is limited to decisions where respondents are paired with black trustees, suggesting a subtler type of racial bias. These insights emphasize the necessity of integrating psychological and social considerations in trust research, and also suggest policy implications for the importance of transparency in reducing ambiguity, particularly where group identity might play a role.