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What you don’t know won’t hurt you: a laboratory analysis of betrayal aversion

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  • Jason Aimone

    ()

  • Daniel Houser

    ()

Abstract

Recent research argues “betrayal aversion” leads many people to avoid risk more when a person, rather than nature, determines the outcome of uncertainty. However, past studies indicate that factors unrelated to betrayal aversion, such as loss aversion, could contribute to differences between treatments. Using a novel experiment design to isolate betrayal aversion, one that varies how strategic uncertainty is resolved, we provide rigorous evidence supporting the detrimental impact of betrayal aversion. The impact is substantial: holding fixed the probability of betrayal, the possibility of knowing that one has been betrayed reduces investment by about one-third. We suggest emotion-regulation underlies these results and helps to explain the importance of impersonal, institution-mediated exchange in promoting economic efficiency. Copyright Economic Science Association 2012

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Bibliographic Info

Article provided by Springer in its journal Experimental Economics.

Volume (Year): 15 (2012)
Issue (Month): 4 (December)
Pages: 571-588

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Handle: RePEc:kap:expeco:v:15:y:2012:i:4:p:571-588

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Web page: http://www.springerlink.com/link.asp?id=102888

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Keywords: Betrayal aversion; Risk; Trust; Emotion regulation; C91; D03; D81;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Temptation
    by Nicholas Gruen in Club Troppo on 2008-11-12 23:47:33
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Cited by:
  1. Steffen Keck & Natalia Karelaia, 2012. "Does competition foster trust? The role of tournament incentives," Experimental Economics, Springer, vol. 15(1), pages 204-228, March.
  2. Houser, Daniel & Schunk, Daniel & Winter, Joachim & Xiao, Erte, 2010. "Temptation and Commitment in the Laboratory," Munich Reprints in Economics 19377, University of Munich, Department of Economics.
  3. Jason A. Aimone & Daniel Houser, 2012. "Harnessing the Benefits of Betrayal Aversion," Working Papers 1030, George Mason University, Interdisciplinary Center for Economic Science.
  4. Fairley, Kim & Sanfey, Alan & Vyrastekova, Jana & Weitzel, Utz, 2012. "Social risk and ambiguity in the trust game," MPRA Paper 42302, University Library of Munich, Germany.

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