Status and Distrust: The Relevance of Inequality and Betrayal Aversion

Abstract

Trust is related to people's willingness to accept vulnerability, composed of their willingness to accept the risk of being worse off than if they had never trusted, the risk of being worse off than the trusted party, and the risk of being betrayed by the trusted party. We examine how people's status, focusing on sex, race, age and religion, affects their willingness to accept these three risks. We experimentally measure a person's willingness to accept risk in a Decision Problem, a Risky Dictator Game and a Trust Game. Groups typically considered having lower status in the US - women, minorities, younger people and non-Protestants - are averse to inequality while higher status groups - male, white, older and Protestant decision makers - dislike being betrayed. This heterogeneity in motivation asks for different organizational interventions to decrease distrust depending on a group's status.

Keywords: Trust, Status, Risk, Inequality, Betrayal, Laboratory Experiments, Economics - Microeconomics, Leadership/Conflict Management