Trust, Values and False Consensus
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.
We are grateful to seminar participants at the Bank of Spain, the California Center for Population Research at UCLA, the Einaudi Institute for Economics and Finance, the Kaler Meeting at UCLA, the FEEM conference on the Economics of Culture, Institutions and Crime, the EALE/SOLE joint conference in London, the 9th IZA/SOLE Transatlantic Meeting of Labor Economists, the seventh International Meeting on Behavioral and Experimental Economics, the Higher School of Economics in Moscow, the London School of Economics, the University of California Davis, the NBER Political Economy Meeting, University of Mannheim, Universidad Pompeu Fabra, University of San Diego, University of Siena, Stanford University and Toulouse University for helpful comments. Luigi Guiso thanks EIEF for financial support and LUISS University for making the LUISS lab available. Paola Giuliano thanks the UCLA-CIBER grant for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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