Harnessing the Benefits of Betrayal Aversion

Jason Aimone () and Daniel Houser ()
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Jason Aimone: Virginia Tech Carilion Research Institute

No 1030, Working Papers from George Mason University, Interdisciplinary Center for Economic Science

Abstract: Recent research suggests that while there are negative effects of betrayal aversion, that the presence of betrayal-averse agents is beneficial in reducing trusteesÕ willingness to betray trust. If true, then many common knowledge institutions may have adopted institutional rules and features which mitigate the emotional disutility associated with betrayal aversion while simultaneously maintaining the high levels of reciprocation brought about by the presence of betrayal-averse agents. Here we conduct a laboratory experiment which identifies a prevalent successful institutional feature common to many every-day institutions: the voluntary, but not forced, option to discover the painful details of failed economic exchange. Length: 29

Keywords: Betrayal Aversion; Risk; Trust; Institutions (search for similar items in EconPapers)
JEL-codes: C9 D03 D81 (search for similar items in EconPapers)
Date: 2012-01
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