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Is it Betrayal Aversion or Regret Aversion?

Itzhak Aharon
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Itzhak Aharon: Interdisciplinary Center Herzliya

No 2012037, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Social and economic exchanges often occur between strangers who cannot rely on past behavior or the prospect of future interactions to establish mutual trust. Game theorists formalize this problem in several "one-shot” game – such as the trust game - predicting noncooperation – since the investor is not expecting trustee to reciprocate it is not rationally to invest. Bohnet and Zeckhauser (2004) suggest that, due to betrayal aversion, people seek to avoid situation in which one could be betrayed. We argue that this behavior could emerge also due to regret aversion.

Keywords: Trust; Game theory; Betrayal aversion; Regret aversion; Decision making; Risk Gambling (search for similar items in EconPapers)
JEL-codes: A12 A13 D81 (search for similar items in EconPapers)
Date: 2012-09-01
Note: Special Issue : Trust and Decision through Neuro-Economics
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