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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 of Labor Economics (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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    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. Bigoni, Maria & Rattini, Veronica, 2018. "A Tale of Two Cities: An Experiment on Inequality and Preferences," IZA Discussion Papers 11758, Institute of Labor Economics (IZA).
    2. 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.
    3. Bilgihan, Anil & Barreda, Albert & Okumus, Fevzi & Nusair, Khaldoon, 2016. "Consumer perception of knowledge-sharing in travel-related Online Social Networks," Tourism Management, Elsevier, vol. 52(C), pages 287-296.
    4. Schwerter, Frederik & Zimmermann, Florian, 2020. "Determinants of trust: The role of personal experiences," Games and Economic Behavior, Elsevier, vol. 122(C), pages 413-425.
    5. Daniele, Gianmarco & Geys, Benny, 2015. "Interpersonal trust and welfare state support," European Journal of Political Economy, Elsevier, vol. 39(C), pages 1-12.
    6. Sylvain Mignot & Annick Vignes, 2019. "Trust somebody but choose carefully : an empirical analysis of social relationships on an exchange market," Working Papers hal-02005026, HAL.
    7. Toussaert, Séverine, 2017. "Intention-based reciprocity and signaling of intentions," LSE Research Online Documents on Economics 69803, London School of Economics and Political Science, LSE Library.
    8. Proto, Eugenio & Sgroi, Daniel, 2017. "Biased beliefs and imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 186-202.
    9. 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.
    10. Gamba, Astrid & Regner, Tobias, 2019. "Preferences-dependent learning in the centipede game: The persistence of mistrust," European Economic Review, Elsevier, vol. 120(C).
    11. Toussaert, Séverine, 2017. "Intention-based reciprocity and signaling of intentions," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 132-144.
    12. Stone, Daniel, 2018. "Just a big misunderstanding? Bias and Bayesian affective polarization," SocArXiv 58sru, Center for Open Science.
    13. van den Akker, Olmo R. & van Assen, Marcel A.L.M. & van Vugt, Mark & Wicherts, Jelte M., 2020. "Sex differences in trust and trustworthiness: A meta-analysis of the trust game and the gift-exchange game," Journal of Economic Psychology, Elsevier, vol. 81(C).

    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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