01 Apr 2009

People quickly realise they can use simple ''cues'' such as smiling as a genuine sign of trustworthiness. That is the main result of a laboratory experiment conducted by Paola Manzini, Abdolkarim Sadrieh and Nicolaas Vriend, which tries to assess the economic meaning of a smile.

Their research, published in the April 2009 Economic Journal, sets up a business game in which trust and effort will bring greater rewards for the two players. At the start of each round the players are casually asked to communicate to each other that they are set to play by sending either a ''ready'' or a ''smiling'' message. The results show that:

  • First, players recognise and exploit the possibility to use the ''smiling'' message to signal their trustworthiness, genuinely signalling by smiles that they will put in higher effort.
  • Second, if players have to pay a small price to smile, there are fewer smiles but higher effort for smiling pairs.
  • Third, if one player has to decide whether or not to smile before the other does, there are more smiling pairs.

Notwithstanding the fact that these experimental findings support the casual empirical evidence that simple cues can be used to signal trustworthiness, the researchers do not observe a tendency to widespread smiling behaviour.

This seems related to the fact that misinterpretation is costly, a finding that echoes the wisdom among international management scholars that sending the right cues may be great for business, but if one does not know the culture well enough to get it exactly right, it might be better to avoid cueing.

Trust is essential in social interactions, because often you need to make decisions for which the outcomes also depend on decisions taken by other people, without knowing what these other people will do. So you need to trust them that they will not choose an action that may damage you.

There is ample evidence that simple cues play an important role concerning the perception of trustworthiness. Such cues may be unconscious, for example, tone of voice. But they may also be the result of deliberate choice behaviour, for example, smiles, winks, handshakes, hairstyles, tattoos, clothing or personalised numberplates.

The fact that they are quick and economical makes these cues effective in situations in which a quick establishment of trust is necessary. These include casual encounters – for example, in traffic – but also many situations where there is scope for extensive communication. For example, in job interviews, the first minute is the crucial one, and a candidate needs to make eye contact, smile and give a firm handshake.

Obviously, major business deals are not based on a smile alone. But the details of such deals are only worked out if there is trust – and this seems to be the reason why most important business communication tends to be conducted face-to-face. Trust is also important in longstanding doctor-patient relationships, where it has been observed that ''a smile a day keeps the lawsuits away''.

What is it about these simple signals, exchanged typically through face-to-face interactions that are essential to create trust? To investigate this, the researchers organise a game based on the example of two potential business partners who need to work out the details of a deal, and investigate this experimentally in the laboratory.

Two players each need to decide how much effort to choose without knowing the other''s intention. The more effort you put in, the more it costs you whereas the payoff from the deal as such is determined by the smaller of the two efforts. The higher this minimum effort is, the better the project will be and the bigger the payoffs.

The ideal outcome is for you both to put in the highest possible effort. But failing that, it is always better for you to put in exactly the same effort as the other, no matter how low this may be. So to put in high effort, you need to trust the other player to do the same.

At the start of each round, the players are casually asked to communicate to each other that they are set to play the game by sending either a ''ready'' or a ''smiling'' message. The researchers then analyse the interactions between smiling and effort choices.

''On Smiles, Winks and Handshakes as Coordination Devices'' by Paola Manzini, Abdolkarim Sadrieh, and Nicolaas Vriend is published in the April 2009 issue of the Economic Journal.

Paola Manzini

Nicolaas Vriend

Department of Economics, Queen Mary, University of London | +44 207-882-8854 |

Abdolkarim Sadrieh

Faculty of Economics and Management, University of Magdeburg.