This award funds doctoral dissertation research. The research uses laboratory experiments to investigate betrayal in social exchange environments. Specifically, the experiments identify the specific effects that aversion to betrayal has on decisions about whether to trust a trading partner. This is an advance on previous research, where the effects of betrayal aversion could not be separated from other factors such as altruism, risk preferences, and loss aversion that also affect trust decisions. A separate series of experiments examines whether the disutility caused by betrayal knowledge acts as a check on trustees' willingness to betray and whether trust and exchange breaks down when betrayal knowledge is absent. The final part of the project investigates the motives for betrayal.
Trust and betrayal decisions are present in everyday economic exchanges. The experimental design developed in this project can be used in classrooms to help students understand how trust affects the way markets function.
