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What You Don't Know Won't Hurt You: A Laboratory Analysis of Betrayal Aversion

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Listed:
  • Jason Aimone

    () (Interdisciplinary Center for Economic Science, George Mason University)

  • Daniel Houser

    () (Interdisciplinary Center for Economic Science, George Mason University)

Abstract

Trust promotes economic growth and development, and previous research has shed much light on reciprocity and other motives for trusting decisions. Why people choose not to trust has received substantially less attention, perhaps in part because not trusting is predicted by standard economic theory: selfish people consider the (perhaps subjective) stochastic nature of the environment and make the earnings-maximizing decision. This explanation is incomplete: we provide evidence from a laboratory analysis with an investment game that people's decisions vary according to how an environment's uncertainty will be resolved. In particular, if resolving uncertainty requires an investor to learn whether her trustee chose to betray then she is much less likely to trust. Our data thus provide evidence that ¡°betrayal aversion¡± detrimentally affects propensities for trusting decisions. Our results also emphasize the importance of impersonal, institution-mediated exchange in promoting investment and economic efficiency.

Suggested Citation

  • Jason Aimone & Daniel Houser, 2008. "What You Don't Know Won't Hurt You: A Laboratory Analysis of Betrayal Aversion," Working Papers 1008, George Mason University, Interdisciplinary Center for Economic Science, revised Sep 2008.
  • Handle: RePEc:gms:wpaper:1008
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Temptation
      by Nicholas Gruen in Club Troppo on 2008-11-13 05:47:33

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    Cited by:

    1. Simone Quercia, 2016. "Eliciting and measuring betrayal aversion using the BDM mechanism," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 2(1), pages 48-59, May.
    2. Gary E. Bolton & Christoph Feldhaus & Axel Ockenfels, 2016. "Social Interaction Promotes Risk Taking in a Stag Hunt Game," German Economic Review, Verein für Socialpolitik, vol. 17(3), pages 409-423, August.
    3. repec:zur:iewwpx:488 is not listed on IDEAS
    4. repec:eee:jeborg:v:141:y:2017:i:c:p:110-121 is not listed on IDEAS
    5. Aimone, Jason A. & Houser, Daniel, 2013. "Harnessing the benefits of betrayal aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 1-8.
    6. Cubitt, Robin & Gächter, Simon & Quercia, Simone, 2017. "Conditional cooperation and betrayal aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 110-121.
    7. Rémi Suchon & Marie Claire Villeval, 2017. "Does upward mobility harm trust?," Post-Print halshs-01659021, HAL.
    8. Corgnet, Brice & Espín, Antonio M. & Hernán-González, Roberto & Kujal, Praveen & Rassenti, Stephen, 2016. "To trust, or not to trust: Cognitive reflection in trust games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 64(C), pages 20-27.
    9. Luigi Butera & John A. List, 2017. "An Economic Approach to Alleviate the Crises of Confidence in Science: With an Application to the Public Goods Game," NBER Working Papers 23335, National Bureau of Economic Research, Inc.
    10. Jeffrey V. Butler & Joshua B. Miller, 2014. "Social Risk: the Role of Warmth and Competence," Working Papers 522, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    11. Simone Quercia, 2015. "On the Elicitation and Measurement of Betrayal Aversion," Discussion Papers 2015-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    12. repec:jdm:journl:v:12:y:2017:i:6:p:584-595 is not listed on IDEAS
    13. Rodet, Cortney S., 2015. "An experiment in political trust," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 17-25.
    14. repec:eee:soceco:v:69:y:2017:i:c:p:4-17 is not listed on IDEAS
    15. Philip J. Grossman & Mana Komai & James E. Jensen, 2015. "Leadership and gender in groups: An experiment," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 368-388, February.
    16. Rémi Suchon & Marie Claire Villeval, 2018. "Does upward mobility harm trust?," Working Papers halshs-01687271, HAL.
    17. Steffen Keck & Natalia Karelaia, 2012. "Does competition foster trust? The role of tournament incentives," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 204-228, March.
    18. Anbarcı, Nejat & Feltovich, Nick & Gürdal, Mehmet Y., 2015. "Lying about the price? Ultimatum bargaining with messages and imperfectly observed offers," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 346-360.
    19. Fairley, Kim & Sanfey, Alan & Vyrastekova, Jana & Weitzel, Utz, 2016. "Trust and risk revisited," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 74-85.
    20. 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.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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