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Harnessing the benefits of betrayal aversion

Jason Aimone and Daniel Houser

Journal of Economic Behavior & Organization, 2013, vol. 89, issue C, 1-8

Abstract: Recent research suggests that while betrayal aversion may have negative effects, the presence of betrayal-averse agents is beneficial in reducing trustees’ willingness to betray trust. In light of this, many common knowledge institutions may have adopted 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 that identifies one such feature common to many institutions successfully governing economic and social interaction: the option to avoid knowing painful details of failed economic exchange.

Keywords: Betrayal aversion; Risk; Trust; Institutions (search for similar items in EconPapers)
JEL-codes: C91 D03 D81 (search for similar items in EconPapers)
Date: 2013
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Working Paper: Harnessing the Benefits of Betrayal Aversion (2012) Downloads
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DOI: 10.1016/j.jebo.2013.02.001

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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