Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67216
Authors: 
Butler, Jeffrey V.
Giuliano, Paola
Guiso, Luigi
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 6916
Abstract: 
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. Mis-calibrated beliefs lower participants' experimental trust game earnings by about 20 percent on average.
Subjects: 
trust
trustworthiness
culture
false consensus
JEL: 
A1
A12
D1
Z1
Document Type: 
Working Paper

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