Trust, Values and False Consensus
AbstractTrust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners - i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that one’s own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Miscalibrated beliefs lower participants’ experimental trust game earnings by about 20 percent on average.
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Bibliographic InfoPaper provided by Einaudi Institute for Economics and Finance (EIEF) in its series EIEF Working Papers Series with number 1210.
Length: 27 pages
Date of creation: 2012
Date of revision: Oct 2012
Other versions of this item:
- Butler, Jeffrey V. & Giuliano, Paola & Guiso, Luigi, 2012. "Trust, Values and False Consensus," IZA Discussion Papers 6916, Institute for the Study of Labor (IZA).
- Jeffrey Butler & Paola Giuliano & Luigi Guiso, 2012. "Trust, Values and False Consensus," NBER Working Papers 18460, National Bureau of Economic Research, Inc.
- Butler, Jeff & Giuliano, Paola & Guiso, Luigi, 2012. "Trust, Values and False Consensus," CEPR Discussion Papers 9216, C.E.P.R. Discussion Papers.
- A1 - General Economics and Teaching - - General Economics
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- Z1 - Other Special Topics - - Cultural Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-27 (All new papers)
- NEP-EXP-2012-10-27 (Experimental Economics)
- NEP-GTH-2012-10-27 (Game Theory)
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- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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