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Trust, Values and False Consensus

Author

Listed:
  • Butler, Jeffrey V.

    () (Einaudi Institute for Economics and Finance)

  • Giuliano, Paola

    () (University of California, Los Angeles)

  • Guiso, Luigi

    () (Einaudi Institute for Economics and Finance)

Abstract

Trust 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. Mis-calibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.

Suggested Citation

  • Butler, Jeffrey V. & Giuliano, Paola & Guiso, Luigi, 2012. "Trust, Values and False Consensus," IZA Discussion Papers 6916, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6916
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    References listed on IDEAS

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    1. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On false consensus
      by chris dillow in Stumbling and Mumbling on 2014-10-28 19:11:06

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    Cited by:

    1. Jin, Dawei & Wang, Haizhi & Wang, Peng & Yin, Desheng, 2016. "Social trust and foreign ownership: Evidence from qualified foreign institutional investors in China," Journal of Financial Stability, Elsevier, vol. 23(C), pages 1-14.
    2. repec:eee:touman:v:52:y:2016:i:c:p:287-296 is not listed on IDEAS
    3. Daniele, Gianmarco & Geys, Benny, 2015. "Interpersonal trust and welfare state support," European Journal of Political Economy, Elsevier, vol. 39(C), pages 1-12.
    4. repec:eee:jeborg:v:136:y:2017:i:c:p:186-202 is not listed on IDEAS
    5. Proto, Eugenio & Sgroi, Daniel, 2017. "Biased beliefs and imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 186-202.
    6. Berggren, Niclas & Nilsson, Therese, 2015. "Globalization and the transmission of social values: The case of tolerance," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 371-389.
    7. repec:eee:jeborg:v:137:y:2017:i:c:p:132-144 is not listed on IDEAS

    More about this item

    Keywords

    trust; trustworthiness; culture; false consensus;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • D1 - Microeconomics - - Household Behavior
    • Z1 - Other Special Topics - - Cultural Economics

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