Social Preferences, Trust, and Communication when the Truth Hurts

Jonathan Gehle, Ferdinand A. von Siemens and Ferdinand von Siemens

No 11181, CESifo Working Paper Series from CESifo

Abstract: We investigate how heterogeneous social preferences affect the communication of painful information in social relationships. We characterize the existence conditions for a pooling equilibrium in which individuals conceal painful information because revealing the latter would signal that they are selfish, thereby leading to a loss of trust. We also find that compassionate individuals may then be more tempted to reveal bad news than selfish individuals because they benefit less from an intact social relationship. Moreover, there may be multiple equilibria with different degrees of information disclosure and standard equilibrium refinements have no bite. Coordination on an inefficient equilibrium could therefore lead to severe information frictions, even if the pain of receiving bad news is quite small.

Keywords: communication; painful information; social preferences; trust (search for similar items in EconPapers)
JEL-codes: D82 D83 D91 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-evo, nep-exp, nep-gth, nep-mic and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11181

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