Betrayal Aversion on Four Continents
25 Pages Posted: 7 Jun 2006
Date Written: February 2006
Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in four countries (Brazil, Switzerland, the United Arab Emirates and the United States) confronted either a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their "minimal acceptable probability" (MAP) for securing the high payoff that would make them just willing to accept the risky rather than the sure payoff. People's MAPs are significantly higher when another person rather than nature determines the outcome. This indicates betrayal aversion.
Keywords: Risk aversion, betrayal aversion, social risk, cross-cultural experiments, Economics - Microeconomics, Leadership/Conflict Management
JEL Classification: C72, C91
Suggested Citation: Suggested Citation