Investment Risk, Information Disclosure, and Market trust—Based on trust game experiment research

This paper studies the influence of investment risk and information disclosure on market trust by extending the classic trust game experiment. First of all, the investment trust experiment with no investment risk and investment risk was conducted respectively,then by introducing investment-related information study the game problem of market investment trust. The results show that, the uncertainty risk of investment returns will significantly reduce the level of mutual trust among participants in the investment market and Inhibit investment. At the same time, the impact of such income uncertainty is heterogeneous. In the case of higher income level, risk has less inhibitory effect on investment, while in the case of lower income level, risk has greater inhibitory effect on investment. Investment-related information disclosure can improve market trust, and more importantly, it can effectively reduce the adverse impact of investment risks on market trust. Therefore, in the process of continuous improvement of the capital market, the establishment of a standardized information disclosure mechanism and the reduction of information asymmetry can reduce the impact of risks on the market and give play to the function of the capital market in the efficient allocation of funds. Keywords— Market trust, Experimental study, Investment risk, Information disclosure.

ISSN: 2456-7620 https://dx.doi.org/10.22161/ijels.61. 1 2 trust can obtain better economic consequences (Fukuyama,1995 [4] ; Putnam,1993 [5] ).Market trust promotes economic growth and financial development (Portaetal.,1997 [6] ; Guiso et al.,2004 [7] ), but also affect the investment and financing decisions of micro enterprises (Dai et al.,2009 [8] ;Panet al.,2009 [9] ).As an important regulating force in economic operation, the lack of market trust will bring negative impact on the whole social and economic development, and the impact of the lack of trust will spread quickly in a short time.Therefore, in order to 2002 [10] ).When the investment risk increases, it will seriously damage the investor's confidence, thus reducing the trust relationship of the whole market and inhibiting the reasonable allocation of resources. Without the support of trust, the market will fall into chaos and disorder, which may trigger systemic risks and even undermine social stability.
An important reason for market risk is the asymmetry of information. The stable operation of the contemporary market economy cannot do without a good environment for information dissemination, and the investment market is highly dependent on information. Although the development of modern social science and technology has created favorable conditions for the transmission of information, in many cases, the access to information is still limited by various conditions. Such information asymmetry is determined by the shared characteristics of information.
As a kind of quasi-public goods, information is highly competitive, and individuals need to pay a high cost to obtain information. In addition, in the process of information transmission, from the information source to the information user, the information will objectively occur in the time delay and information content leakage.Information intermediaries in the market have the responsibility to identify and identify the authenticity, accuracy and integrity of information. However, with the lack of credit of a large number of individual companies, more and more problems of lack of trust are exposed. Therefore, the research on the relationship between investment risk and information disclosure and market trust part results analysis;The fifth part is the main conclusion.

HYPOTHESIS
The earliest and most famous research on social trust is the trust game experiment of Berg, Dickhaut and Mccabe(1995) [11] , which proves the existence of trust and  [12] found that people's initial endowment of funds would have an impact on people's trust level in the economy. Cameron(1999) [13] drew a different conclusion that endowment of funds would not change public trust behavior (Fehr et al. 2002 [14] ;Li Bin et al., 2015 [15] ).The size of investment returns also has an impact on investors' trust, and different growth rates will affect trustors' decision-making behaviors when considering their investment (Coleman, 1990 [16] ;Bolle 1990 [17] ;Bottom,1998 [18] ).At the same time, when the identity of the investor is unknown, investors will show lower trust (Sanfey et al. 2003 [19] ; Bottom et al. 2006 [20] ).In addition, the intensity of government control in a country (Aghion et al. 2010 [21] ), cultural differences and gender differences (Slonim and Guillen, 2010 [22] ) all affect the public's market trust.Therefore, the factors that affect market trust are numerous and complex, and trust is easily impacted by various factors. Therefore, it is of great importance to study the factors that can have the most significant impact on trust.Among them, the impact of various types of risks on trust is one of the most important reasons, which needs to be further studied.

The impact of risk on trust
Reviewing the development history of China's market economy, events leading to market trust crisis are common.
From financial fraud of listed companies to non-disclosure or delayed disclosure of problematic information of companies, a series of risks have a huge impact on investor trust, and market trust is constantly destroyed.External risks of economic environment will have an impact on social trust and reduce the level of social trust (Li et al.,2015 [15] ).
Uncertainty of economic environment will affect the investment rate, and the degree of characteristic risk inhibiting investment will increase with the increase of risk (Liet al., 2018 [23] ).Li et al. (2017) [24] studied the relationship between bank operation risk and market trust, and found that the two are mutually causal. The increase of risk will reduce depositor trust, and the decrease of trust will further increase bank risk through the fluctuation of return on assets.Chen et al. (2014) [25] also studied the impact of perceived risk in online lending on trust, and the increase of perceived risk will significantly affect trust and reduce lending willingness.At the same time, risk changes will also have an impact on consumer trust, and increased risks will  [26] ).Liuet al.(2016) [27] studied the internal relationship between stock price crash risk and regional social trust. The higher the level of social trust in the region where the listed company is located, the lower the risk of the company's stock price crash in the future.Li and Yang(2015) [28] studied the impact of risks on enterprise investment from the perspective of economic policy uncertainty, and when uncertain risks increase, enterprises' investment will be inhibited.Liu and Cao(2017) [29] found that the risk of found that the higher the quality of a company's information disclosure, its financing costs and bond financing costs will be significantly reduced (Botosan, 1997 [30] ; Botosan et al., 2002 [31] ; Sengupta, 1998 [32] ; Wang Wei et al., 2004 [33] ), listed companies with different levels of disclosure also have significant differences in the market liquidity of their stocks. The higher the level of disclosure, the smaller the bid-ask spread, the higher the liquidity of listed companies (Zhanget al., 2007 [34] ). Since there are analysts in the market, the uncertainty of listed companies and analysts can be reduced by collecting information on listed companies. When listed companies take the initiative to disclose information, analysts will provide investors with more efficient investment advice (Botosanet al., 2004 [35] ), in order to enhance their market recognition, analysts are more inclined to chase listed companies with higher levels of information disclosure to ensure that their forecast errors are less volatile (Lang et al., 1996 [36] ).
However, establishing and ensuring the timely, accurate, and comprehensive information disclosure in the market is a long-term and complex systematic project. It is precisely because of the lack of information that many risks appear, which seriously affect the trust relationship in the market. This is usually due to the limited rationality of   [37] found that the information of a listed company represents its characteristics. The lower the degree of disclosure of a company, the higher the synchronization between its stock price and the market index. The detailed disclosure of financial audit opinions by listed companies can effectively reduce investor confidence and increase investment willingness. Strengthening the disclosure of corporate auditing and internal control is of positive significance for improving investors' investment decision-making (Zhanget al., 2011 [38] ). Wang et al.
(2018) [39] found through the operation of online loan platforms that the more information disclosed on the platform, the easier it is to attract investors to participate in Hypothesis 2b: The more information disclosed, the higher the level of investor trust; Hypothesis 2c: Information disclosure can effectively reduce the adverse impact of uncertain risks on investment trust.

III. RESEARCH DESIGN
For the research on investment risk, information disclosure and market trust, on the one hand, the results are limited because of the obstacles of data acquisition. Trust is a subjective feeling of economic man, and objective and accurate measurement is itself a very difficult problem. On the other hand, even if the data is obtained, it is difficult to identify whether it is a risk factor or other factors that have caused a change in trust. It is even more difficult to identify how information regulates the impact of risk. Therefore, this paper uses the classic trust game experiment designed by Berg, Dickhaut, and McCabe (1995) [11] to change different experimental conditions, more accurately control the influence of different factors, and study the problems of risk, information and information.

Experiment design
(1) Experiment introduction. In the investment game experiment in this article, the experimental process is shown in Figure 1. as an indicator to measure the degree of trust in society. This article also draws on this idea, and at the same time measures the investor market from the two dimensions of the investor's investment ratio and the investor's return ratio Then we study the influence of investment risk and information disclosure on the investment ratio and return ratio , that is, the impact on investment trust.  [14] , Li Bin et al.
(2015) [15] proved that the scale of assets to be invested does not change the investment ratio of trustees. This article sets the initial capital of investor A to be 10 yuan in each round of experiment For follow-up experiments. Regarding whether there are risks in the investment process ( Figure 1 above), first conduct an experiment without investment risk, that is, the return is risk-free. Investor A makes a decision to invest a certain amount, and the return is confirmed to triple to reach the investee B , Investee B decides how much income to return to investor A. In this paper, R is three times when there is no risk, and when the return is risky, R is 0 times, 3 times, and 6 times with one-third probability. After the completion of the control experiment with the investment return of 3 times, the experiment with investment risk is carried out. The investment risk is that when investor A decides how much to invest, the investment will become 0 with a probability of one-third.
The original investment 3 times of the original investment and 6 times of the original investment reach Investor B.
Investor B makes a decision to return the income and decides how much income to return to Investor A. In the course of this experiment, the investment amount is determined by the risk-free 3 times and the risky with a one-third probability of 0, 3, and 6 times. In each round of the experiment, the investor and the investee know exactly .
But when there is investment risk, the amount invested by investor A is not clear to investee B, and the amount of amount that reaches investee B is also unknown to investor A. For example, when the investee B receives an investment with an amount of 0, he does not know whether the investor did not invest at the beginning of the period, or did the investment but the risk return has become 0.
Similarly, for Investor A, when he invests an amount greater than 0 and receives a return amount of 0 from the investor, the investor does not know whether the investor has the return but did not return it, or it was originally caused by risk The income is 0 and cannot be returned.
In the research on the impact of information disclosure  Figure 1 above, the return information reaches the investor to influence the next round of experimental decision-making. There is another type of information in the investment experiment, that is, the information of the fixed counterparty. It is a type of experiment that is randomly matched at the beginning of the experiment to form a group of investors and investees, and trade in multiple rounds in this same type of experiment.
The counterparty is fixed, and both parties to the transaction know this information. At this time, the investor will not only know the amount information returned by the investor in the previous round of the experiment, but also know the counterparty information in the current round of the experiment, which has a stronger information content.
Therefore, in order to study the marginal effect of information on investment trust, this paper conducts investment experiments of the non-information group, the low-information group and the high-information group according to the information content of different types of experiments. Specifically, in the experiment, the group that exchanged the experimental counterparty and did not know the information returned by the investor in the last round was the non-information group, and the group that exchanged the experimental counterparty but the investor knew the information returned by the investor in the previous round was the low-information group. Know the return information and also know that the counterparty information is the high information group. The specific grouping is shown in Table 1 below. Invratio is the ratio of the investment amount selected by the i-th investor in the t-round investment experiment to the total amount, and Retratio is the amount returned to the investor by the i-th investor in the t-round experiment as a percentage of the amount received The proportion of the amount.
(2) Investment risk. Influencing market trust in the market will be affected by various types of investment risks, but among the many investment risks, the risk of uncertainty in return has the greatest impact on investment trust and the most profound impact on trust. Therefore, this article uses the uncertainty risk of return as a measure of investment risk to study the impact of risk on market trust.
In the experiment, the return risk is measured by changing the return conditions. The return has no risk, that is, the return is three times the certainty, and the return is risky.
The probability of one-third is zero, three and six times.
That is, the return risk is a dummy variable, which is 1 when there is a risk, and 0 when there is no risk. Among them, * is the interactive item of investment risk and information disclosure, which means that the i-th investor (or the investee) in the t-round experiment has investment risks and information disclosure.
In case of simultaneous occurrence, the value is 1, otherwise it is 0. The meanings of other variables are the same as in equations (1) and (2) of the model. According to the theoretical information disclosure, the impact on risk has a positive moderating effect, that is, the expected is positive.
(4) The impact of information content. Expected information has a moderating effect on the risk impact, but will it have different effects on different information content? In other words, when the information is disclosed more fully, the degree of market trust is higher, and at the same time, the influence of trust on risk is more significant.
The article conducts a more in-depth analysis of this issue, that is, Hypothesis 2b. In the experiment, under different experimental conditions, it is possible to obtain the influence of information content differences while controlling other factors unchanged, so the samples are grouped according to the difference in information content in the experiment, namely, no information group, low information group and high information group. Group, to study the impact differences under different information situations, the specific form is as follows: Among them, equations (4a) and (5a) have the same regression form as research information disclosure (2), but the difference is that in equation (2), a full sample study is used. The impact of different information content on investors is studied in two sample groups: the high-information group and the high-information group.
Models (4b) and (5b) focus on whether there are differences in the market trust shocks of information disclosure with multiple risks under different information content. That is, the more information content, the more obvious the regulatory effect of the trust shocks of multiple risks.
According to theoretical analysis, and are expected to have greater influence in the group with higher information content than the group with lower content.
(5) Impact of income difference. The study found that listed companies or other investees usually prefer to disclose good news normally, and choose not to disclose or late to disclose bad news, that is, the problem of "reporting good news but not bad news". Therefore, when the income has different conditions, it will affect the information disclosure in the market, and therefore will also cause differences in market trust. Therefore, this paper studies hypothesis 1b by constructing a model, that is, whether there is a different impact on market trust under different circumstances. The model is as follows (6), (7) and (8).

Basic results
In order to study the issue of investment risk on market trust, this article measures whether there is risk in constructing investment returns. The results of the experiment were compared with risk-free returns and risk-free returns, as shown in Figure 2, which can be seen.
When there is no investment risk, investors choose an average investment ratio of 63%. When there is a risk in investment income, the investment ratio drops to an average of 52%. This shows that the existence of investment risk reduces the trust level of investors on average, and the willingness to invest decreases. Similarly, the average return ratio of the investee when there is no risk in the return is 31%. When there is a risk, the return return ratio drops to 13%. In order to further measure the return behavior of the investee, the sample whose investment received by the investor is 0 is eliminated. The return ratio of the investee without risk is 39%, and the return ratio drops to 29 when there is risk. %. This shows that no matter which calculation method is used, the existence of investment risk not only reduces the willingness of investors to invest, but also reduces the willingness of investors to return returns, leading to a decline in trust in the investment market.

Fig.2: The impact of investment risk on investment trust
In order to study whether the impact of investment risk on investors and investees is significant, the experimental results need to be tested for differences. The results are shown in Table 3. From the overall sample point of view, whether it is the investor's investment ratio or the investor's return ratio, the two sets of data have passed the t-test and have significant differences. In addition, this paper also conducts a difference test on the different information content of the experimental samples, and respectively conducts the non-information group, the low-information group and the high-information group when there is investment risk and when there is no investment risk, the investment ratio and return ratio are Difference test. It can be seen that no matter which of the three information groups is, the investment ratio and return ratio under different risk conditions are significantly different. This shows that the existence of investment risk will have a significant impact on the level of trust between investors, and risk will reduce the level of trust between investors, reduce investment expenditures, and reduce the effectiveness of the investment market. In order to test whether information disclosure can improve market investment trust in the investment process, this paper conducts investment game experiments in the non-information group, low-information group and high-information group. Through the comparison of the experimental results of different information groups, the impact of investment information on market trust is tested.
The experimental results are shown in Figure 3 below. The investment ratio of investors increases as the amount of information available increases, and the willingness to invest in the non-information group is only 26%. When there is information, the average investment ratio increases significantly. The investment ratio of investors in the low-information group is 68%, and the investment ratio of investors in the high-information group is as high as 79%.
Similarly, with the increase in information content, the willingness of the investee to return is also increasing. The average return ratio of the investee after excluding 0 returns is 21% in the non-information group and 38% in the low-information group. When increased, the return rate increased to 44%. This shows that the disclosure of investment-related information can effectively increase the investment ratio of investors and the return ratio of investors, increase market trust, and increase participants' willingness to invest.

Risk, information and market trust
The results of the impact of investment risk on market trust are shown in Table 4  , it can be seen that when there is an uncertain risk of investment income, and the following does not specify that the return ratio of the investee is zero, the investee will also reduce its own income. The return ratio and the level of trust have declined. It can be seen from the regression equation (1) that when there is an uncertain risk in return, whether it is an investor or an investor, the market trust of both is significantly reduced, and the willingness to invest decreases. Research hypothesis 1a has been verified.
The model of the impact of information disclosure on market trust is (2a) and (2b) in Table 4.  Note: ***, ** and * indicate statistical significance at the 1%, 5% and 10% levels respectively.  Table 4 above.
This article will study this issue next. In the previous section, the research found that the external risk of 0.026. This shows that when investment risks cannot be avoided, we can reduce information asymmetry by fully disclosing market-related information, thereby reducing the risk of damage to the entire market.

The impact of information content
Information disclosure has a significant effect on market trust and risk adjustment, and further research is needed on the results of different levels of information. This paper builds a model to answer this question in different groups with high and low information content. The specific models are shown in Table 5. Among them, the models (4a) and (5a) have the same regression form as the research information disclosure (2). The difference is that the full sample research is used in the formula (2), and the low information group is used in the formula (4a) and (5a). In the two sample groups of the high-information group and the high-information group, the impact of different information content on investors is studied. It can be seen from the regression results of Note: ***, ** and * indicate statistical significance at the 1%, 5% and 10% levels respectively.

Impact of income difference
Listed companies usually have a tendency to disclose good news normally, and choose to disclose or postpone the disclosure of bad news. That is, when there is a difference in income, it will affect the information disclosure in the market, which will affect market trust in different ways.
Therefore, this article studies hypothesis 1b by constructing models (6), (7) and (8) information content group. In the non-information group (6a) and the low-information group (7a), the rate of return has no significant impact on the investment ratio, but in the high-information group (8a), the effect of the rate of return on the investment ratio is significantly positive 0.034. This shows that the impact of investment income risk on investor trust is heterogeneous, that is, the higher the rate of return, the more confidence in investment and the stronger willingness to invest. And, when the information is disclosed more fully, the return rate has a stronger effect on trust. Therefore, just want to increase the participation of market investment by increasing the rate of return on investment, and increasing the trust of investors will not be effective.

V. MAIN CONCLUSIONS
By extending the classic trust game experiment of Berg et al., this paper studies the influence of investment risk and information disclosure on market trust.It is found that when there are risks in investment, investors' willingness to invest will be significantly reduced, and at the same time, investors' willingness to return returns will be reduced, damaging the trust level of market participants and inhibiting investment. At the same time, the impact of this risk is different at the same time. When the return is high, the inhibitory effect of risk on investment is small; when the return is low, the inhibitory effect of risk on investment will be greater.Further, the influence of different information content of experimental participants on market trust is studied respectively. When there is investment information, the investment proportion of investors increases significantly, and the return proportion of investors also increases.And the greater the amount of information disclosed, the greater the effect. Therefore, the disclosure of investment-related information can effectively improve the level of trust between investment market participants and increase market activity.More importantly, when there is information disclosure, it can effectively reduce the adverse impact of investment risk on market trust.These conclusions are instructive for the improvement of the capital market. In the construction process of China's capital market, it is necessary to establish a standardized information disclosure mechanism to reduce the adverse impact of risks on market trust, so as to give full play to the market's function of efficient allocation of funds.