Einaudi Institute for Economics and Finance
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NBER Working Papers and Publications
|November 2012||Trust and Cheating|
with Paola Giuliano, Luigi Guiso: w18509
When we take a cab we may feel cheated if the driver takes an unnecessarily long route despite the lack of a contract or promise to take the shortest possible path. Is our decision to take the cab affected by our belief that we may end up feeling cheated? Is the behavior of the driver affected by his beliefs about what we consider cheating? We address these questions in the context of a trust game by asking participants directly about their notions of cheating. We find that: i) both parties to a trust exchange have implicit notions of what constitutes cheating even in a context without promises or messages; ii) these notions are not unique - the vast majority of senders would feel cheated by a negative return on their trust/investment, whereas a sizable minority defines cheating according ...
Published: Jeff Butler & Paola Giuliano & Luigi Guiso, 2016. "Trust and Cheating," The Economic Journal, vol 126(595), pages 1703-1738. citation courtesy of
|October 2012||Trust, Values and False Consensus|
with Paola Giuliano, Luigi Guiso: w18460
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 fal...
Published: TRUST, VALUES, AND FALSE CONSENSUS Jeffrey V. Butler1, Paola Giuliano2 andLuigi Guiso3,† Article first published online: 30 JUL 2015 DOI: 10.1111/iere.12125 International Economic Review Volume 56, Issue 3, pages 889–915, August 2015 citation courtesy of
|September 2009||The Right Amount of Trust|
with Paola Giuliano, Luigi Guiso: w15344
We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs. Our interpretation is that highly trusting individuals tend to assume too much social risk and to be cheated more often, ultimately performing less well than those with a belief close to the mean trustworthiness of the population. On the other hand, individuals with overly pessimistic beliefs avoid being cheated, but give up profitable opportunities, therefore underperforming. The cost of either too much or too little trust is comparable to the income lost by forgoing college. We develop a framework to take into account heterogeneity in the trustworthiness of the pool of people with whom individuals interact ...
Published: Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount Of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180, October. citation courtesy of