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Trust, Values and False Consensus

Author Info

Listed author(s):
  • 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.

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File URL: http://ftp.iza.org/dp6916.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6916.

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Length: 29 pages
Date of creation: Oct 2012
Publication status: published in International Economic Review, August 2015, 56 (3), 889-915
Handle: RePEc:iza:izadps:dp6916
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Keywords: trust; trustworthiness; culture; false consensus;

Other versions of this item:

Find related papers by 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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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 14:11:06
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Cited by:

  1. 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.
  2. repec:eee:jeborg:v:137:y:2017:i:c:p:132-144 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. Proto, Eugenio & Sgroi, Daniel, 2017. "Biased beliefs and imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 186-202.
  5. 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.

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