What You Don't Know Won't Hurt You: A Laboratory Analysis Of Betrayal Aversion

Trust promotes economic growth and development, and previous research has shed much light on reciprocity and other motives for trusting decisions. Why people choose not to trust has received substantially less attention, perhaps in part because not trusting is predicted by standard economic theory: selfish people consider the stochastic nature of the environment and make the earnings-maximizing decision. This explanation is incomplete: the authors provide evidence from a laboratory analysis with an investment game that people's decisions vary according to how an environment's uncertainty will be resolved.