May, 2013

Harnessing the Benefits of Betrayal Aversion

  • Jason Aimone

    Assistant Professor of Economics, Baylor University
  • Daniel Houser

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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 dis-utility 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.

Find article at Science Direct.