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Is it Betrayal Aversion or Regret Aversion?

Author

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  • Itzhak AHARON

    (Interdisciplinary Center Herzliya)

Abstract

Social and economic exchanges often occur between strangers who cannot rely on past behavior or the prospect of future interactions to establish mutual trust. Game theorists formalize this problem in several "one-shot” game – such as the trust game - predicting noncooperation – since the investor is not expecting trustee to reciprocate it is not rationally to invest. Bohnet and Zeckhauser (2004) suggest that, due to betrayal aversion, people seek to avoid situation in which one could be betrayed. We argue that this behavior could emerge also due to regret aversion.

Suggested Citation

  • Itzhak AHARON, 2012. "Is it Betrayal Aversion or Regret Aversion?," Discussion Papers (REL - Recherches Economiques de Louvain) 2012037, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvre:2012037
    Note: Special Issue : Trust and Decision through Neuro-Economics
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    File URL: http://www.jstor.org/stable/41714324
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    Cited by:

    1. Yakir Levin & Itzhak Aharon, 2014. "Emotion, utility maximization, and ecological rationality," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 13(2), pages 227-245, November.

    More about this item

    Keywords

    Trust; Game theory; Betrayal aversion; Regret aversion; Decision making; Risk Gambling;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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