Social Risk: the Role of Warmth and Competence
Previous research has documented a behavioral distinction between "social risk" and financial risk. For example, individuals tend to demand a premium on the objective probability of a favorable outcome when that outcome is determined by a human being instead of a randomizing device (Bohnet, Greig, Herrmann, and Zeckhauser 2008; Bohnet and Zeckhauser 2004). In this paper we ask whether social risk is always aversive, answering in the negative and identifying factors that can eliminate, or even change the sign of, the social risk premium. Motivated by the stereotype content model from the social psychology literature, which we argue has straightforward predictions for situations involving social risk (Fiske, Cuddy, and Glick 2007), we focus on two factors: "warmth", synonymous with intent, and "competence." We investigate these factors using a between-subjects experimental design that implements slight modifications of the binary trust game of Bohnet and Zeckhauser across treatments. Our results indicate that having risk generated by another human being does not, on its own, lead to a social risk premium. Instead, we find that a positive risk premium is demanded when a counter-party has interests con icting with one's own (low warmth) and, additionally, is competent. We find a negative social risk premium -i.e., social risk seeking- when the counter-party has contrary interests but lacks competence. JEL Classification: Z1, C91, D81 Keywords: Social Risk, Social Perception, Intention, Betrayal Aversion, Trust
|Date of creation:||2014|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.igier.unibocconi.it/
|Order Information:|| Web: http://www.igier.unibocconi.it/en/papers/index.htm Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Iris Bohnet & Benedikt Herrmann & Richard Zeckhauser, 2010.
"Trust and the Reference points for Trustworthiness in Gulf and Western Countries,"
The Quarterly Journal of Economics,
MIT Press, vol. 125(2), pages 811-828, May.
- Zeckhauser, Richard Jay & Herrmann, Benedikt & Bohnet, Iris, 2010. "Trust and the Reference Points for Trustworthiness in Gulf and Western Countries," Scholarly Articles 9647371, Harvard Kennedy School of Government.
- Herrmann, Benedikt & Zeckhauser, Richard Jay & Bohnet, Iris, 2009. "Trust and the Reference Points for Trustworthiness in Gulf and Western Countries," Scholarly Articles 4417252, Harvard Kennedy School of Government.
- 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.
- Björn Bartling & Ernst Fehr & Holger Herz, 2013.
"The intrinsic value of decision rights,"
ECON - Working Papers
120, Department of Economics - University of Zurich, revised Jun 2014.
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
- Jason Aimone & Daniel Houser, 2012.
"What you don’t know won’t hurt you: a laboratory analysis of betrayal aversion,"
Springer, vol. 15(4), pages 571-588, December.
- 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.
- Camerer, Colin & Weigelt, Keith, 1988. "Experimental Tests of a Sequential Equilibrium Reputation Model," Econometrica, Econometric Society, vol. 56(1), pages 1-36, January.
- Bohnet, Iris & Zeckhauser, Richard, 2003.
"Trust, Risk and Betrayal,"
Working Paper Series
rwp03-041, Harvard University, John F. Kennedy School of Government.
When requesting a correction, please mention this item's handle: RePEc:igi:igierp:522. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.