Project information
How expectations affect the levels of betrayal aversion (EXP_BA_PRJKT)

According to the standard economic theory, rationality is widely known as the concept where humans maximize utility. Nevertheless, rationality rarely holds when players are averse to betrayal.
Betrayal aversion has an impact on society's economic transactions. It is often considered one of the significant factors that can be responsible for the failure of a transaction when there is uncertainty and asymmetry of information. While previous literature has provided evidence of the existence of betrayal aversion, no substantial research manages to minimize the levels of betrayal aversion.
This research will address betrayal aversion by providing evidence that manipulating individuals' expectations can reduce its levels. The study will involve a simple trust game, where subjects will be matched with an agent and a computer separately and asked to state their minimum acceptable probability of entering the game. Previous research has shown that people require a higher premium to trust in a game with a human rather than a computer. The difference between these two minimum acceptable probabilities is the level of betrayal aversion, which will be the focus of our study.
This research contributes to the previous literature since after collecting the individual levels of betrayal aversion, the subjects will go through a manipulation procedure of their expectations to tackle their levels of betrayal aversion to a reasonable level. The subjects will be assigned to treatment and control groups, where the treatment group will go through a manipulation procedure of both normative and empirical expectations. The study will successfully demonstrate that the group with experience will depict lower levels of betrayal aversion than the control group.