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Harnessing the Benefits of Betrayal Aversion

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  • Jason A. Aimone

    ()
    (Virginia Tech Carilion Research Institute)

  • Daniel Houser

    ()
    (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)

Abstract

Recent research suggests that while there are negative effects of betrayal aversion, that the presence of betrayal-averse agents is beneficial in reducing trusteesÕ willingness to betray trust. If true, then many common knowledge institutions may have adopted institutional rules and features which mitigate the emotional disutility associated with betrayal aversion while simultaneously maintaining the high levels of reciprocation brought about by the presence of betrayal-averse agents. Here we conduct a laboratory experiment which identifies a prevalent successful institutional feature common to many every-day institutions: the voluntary, but not forced, option to discover the painful details of failed economic exchange. Length: 29

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Bibliographic Info

Paper provided by George Mason University, Interdisciplinary Center for Economic Science in its series Working Papers with number 1030.

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Date of creation: Jan 2012
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Handle: RePEc:gms:wpaper:1030

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Keywords: Betrayal Aversion; Risk; Trust; Institutions;

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References

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  1. Daniel Houser & Daniel Schunk & Joachim Winter, 2006. "Trust Games Measure Trust," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 06112, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  2. Gary Charness & Martin Dufwenberg, 2004. "Promises and Partnership," Levine's Bibliography 122247000000000001, UCLA Department of Economics.
  3. Ernst Fehr & Simon Gaechter, . "Cooperation and Punishment in Public Goods Experiments," IEW - Working Papers 010, Institute for Empirical Research in Economics - University of Zurich.
  4. Jason Aimone & Daniel Houser, 2012. "What you don’t know won’t hurt you: a laboratory analysis of betrayal aversion," Experimental Economics, Springer, vol. 15(4), pages 571-588, December.
  5. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics, University of Munich, Department of Economics 20650, University of Munich, Department of Economics.
  6. Bohnet, Iris & Hermann, Benedikt & Zeckhauser, Richard, 2009. "Trust and the Reference Point for Trustworthiness in Gulf and Western Countries," Working Paper Series rwp09-015, Harvard University, John F. Kennedy School of Government.
  7. Masclet, D. & Noussair, C. & Tucker, S. & Villeval, M.C., 2001. "Monetary and Non-monetary Punishment in the Voluntary Contributions Mechanism," Purdue University Economics Working Papers 1141, Purdue University, Department of Economics.
  8. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics, Stockholm University, Department of Economics 2003:3, Stockholm University, Department of Economics.
  9. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  10. Koehler, Jonathan J. & Gershoff, Andrew D., 2003. "Betrayal aversion: When agents of protection become agents of harm," Organizational Behavior and Human Decision Processes, Elsevier, Elsevier, vol. 90(2), pages 244-261, March.
  11. Hong, Kessely & Bohnet, Iris, 2007. "Status and distrust: The relevance of inequality and betrayal aversion," Journal of Economic Psychology, Elsevier, Elsevier, vol. 28(2), pages 197-213, April.
  12. Eckel, Catherine C. & Wilson, Rick K., 2004. "Is trust a risky decision?," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 447-465, December.
  13. Bohnet, Iris & Zeckhauser, Richard, 2004. "Trust, risk and betrayal," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 467-484, December.
  14. Erte Xiao & Daniel Houser, 2005. "Emotion expression in human punishment behavior," Experimental, EconWPA 0504003, EconWPA, revised 18 May 2005.
  15. Andrew D. Gershoff & Jonathan J. Koehler, 2011. "Safety First? The Role of Emotion in Safety Product Betrayal Aversion," Journal of Consumer Research, University of Chicago Press, University of Chicago Press, vol. 38(1), pages 140 - 150.
  16. Houser, Daniel & Schunk, Daniel & Winter, Joachim, 2010. "Distinguishing trust from risk: An anatomy of the investment game," Journal of Economic Behavior & Organization, Elsevier, vol. 74(1-2), pages 72-81, May.
  17. Ernst Fehr, 2009. "On the economics and biology of trust," IEW - Working Papers 399, Institute for Empirical Research in Economics - University of Zurich.
  18. Fetchenhauer, Detlef & Dunning, David, 2012. "Betrayal aversion versus principled trustfulness—How to explain risk avoidance and risky choices in trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 534-541.
  19. Iris Bohnet & Fiona Greig & Benedikt Herrmann & Richard Zeckhauser, 2008. "Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States," American Economic Review, American Economic Association, vol. 98(1), pages 294-310, March.
  20. Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 353-369, 06.
  21. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer, Springer, vol. 33(1), pages 67-80, October.
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Cited by:
  1. Jason A. Aimone & Luigi Butera & Thomas Stratmann, 2014. "Altruistic Punishment in Elections," CESifo Working Paper Series 4945, CESifo Group Munich.

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