Betrayal Aversion on Four Continents

25 Pages Posted: 7 Jun 2006

See all articles by Iris Bohnet

Iris Bohnet

Harvard University - Harvard Kennedy School (HKS)

Fiona Greig

JPMorgan Chase Institute

Benedikt Herrmann

University of Nottingham - School of Economics

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Date Written: February 2006

Abstract

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

Bohnet, Iris and Greig, Fiona and Herrmann, Benedikt and Zeckhauser, Richard J., Betrayal Aversion on Four Continents (February 2006). KSG Working Paper No. RWP06-005, Available at SSRN: https://ssrn.com/abstract=902370 or http://dx.doi.org/10.2139/ssrn.902370

Iris Bohnet (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
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United States
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Fiona Greig

JPMorgan Chase Institute ( email )

Washington, DC
United States

Benedikt Herrmann

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1174 (Phone)
617-384-9340 (Fax)

National Bureau of Economic Research (NBER) ( email )

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