Trust, Values and False Consensus

28 Pages Posted: 13 Oct 2012

See all articles by Jeffrey V. Butler

Jeffrey V. Butler

Dept. of Economics, University of California, Merced

Paola Giuliano

University of California, Los Angeles (UCLA) - Anderson School of Management; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Luigi Guiso

Einaudi Institute for Economics and Finance (EIEF)

Multiple version iconThere are 4 versions of this paper

Date Written: October 2012

Abstract

Trust beliefs are heterogeneous across individuals and, at the same time, persistent across generations. We investigate one mechanism yielding these dual patterns: false consensus. In the context of a trust game experiment, we show that individuals extrapolate from their own type when forming trust beliefs about the same pool of potential partners - i.e., more (less) trustworthy individuals form more optimistic (pessimistic) trust beliefs - and that this tendency continues to color trust beliefs after several rounds of game-play. Moreover, we show that one's own type/trustworthiness can be traced back to the values parents transmit to their children during their upbringing. In a second closely-related experiment, we show the economic impact of mis-calibrated trust beliefs stemming from false consensus. Miscalibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.

Suggested Citation

Butler, Jeffrey Vincent and Giuliano, Paola and Guiso, Luigi, Trust, Values and False Consensus (October 2012). NBER Working Paper No. w18460. Available at SSRN: https://ssrn.com/abstract=2161207

Jeffrey Vincent Butler (Contact Author)

Dept. of Economics, University of California, Merced ( email )

5200 N. Lake Road
Merced, CA 95343
United States

HOME PAGE: http://jeffreyvbutler.org

Paola Giuliano

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Luigi Guiso

Einaudi Institute for Economics and Finance (EIEF) ( email )

Via Sallustiana 62
Rome, 00187
Italy
+39 06 4792 4858 (Phone)
+39 06 4792 4872 (Fax)

HOME PAGE: http://www.eief.it/faculty-visitors/faculty-a-z/luigi-guiso/

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