Betrayal Aversion: Evidence from Brazil, China, Oman, Switzerland, Turkey, and the United States

TLDR

Betrayal aversion causes people to be less risk‑seeking when uncertainty is caused by another person than by nature. Participants in six countries played a binary‑choice trust game or a risky decision with identical payoffs and probabilities, and their risk tolerance was measured by the minimum acceptable probability (MAP) needed to choose the risky option. MAPs were consistently higher when the outcome was determined by another person, confirming betrayal aversion. JEL codes: C72, D81, Z13.

Abstract

Due to betrayal aversion, people take risks less willingly when the agent of uncertainty is another person rather than nature. Individuals in six countries (Brazil, China, Oman, Switzerland, Turkey, and the United States) confronted a binary-choice trust game or a risky decision offering the same payoffs and probabilities. Risk acceptance was calibrated by asking individuals their “minimum acceptable probability” (MAP) for securing the high payoff that would make them willing to accept the risky rather than the sure payoff. People's MAPs are generally higher when another person, rather than nature, determines the outcome. This indicates betrayal aversion. (JEL C72, D81, Z13)