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Economic preferences are crucial in decision making. While some preferences remain stable, changes in economic preferences have been linked to institutional and policy changes. We conduct three studies to explore the ways in which decision making might be impacted by economic preferences and underlying or changing policies. Our studies span the domains of preventative healthcare, strategic interactions, and education. Chapter 2 examines the relationship between cooperative decision making and changes in societal level institutions through a meta-meta analysis, incorporating experimental data from various previously conducted meta-analyses. We study the relationship between country or region level policy changes, as measured by economic freedom indices to experimental measures of prosocial and selfish behavior. Our results indicate a relationship between macro-level institutional changes and measures of co-operative behavior that varies based on the starting levels of economic freedom variables. This establishes a relationship between macro policies and individual behavior that suggests that governments should consider the consequences of policies on individual decision making. Chapter 3, using vignette experiments, explores how emotion reappraisal messaging interventions affect betrayal aversion and vaccine hesitancy. The measure of betrayal aversion in our study involves hesitancy in risking being betrayed in situations involving trust related to vaccines. We find that betrayal aversion is prevalent in about a third of our study participants and that two of our messaging interventions substantially reduce betrayal aversion involving vaccination decisions. Our results suggests a targeted messaging strategy for addressing a recently discovered new component of vaccine hesitancy, an important current topic in preventative healthcare. Chapter 4, introduces an active learning intervention in the form of a field experiment involving a health intervention nudge and explores its impact on class engagement and education outcomes of students. In addition, we look at the impact of the nudge on vaccination uptake among students. We find improved class engagement as well as improvement in test scores for students who had the opportunity and chose to participate in the nudge experiment. In addition, we find greater uptake of influenza vaccination, as targeted by the nudge treatment. Our results show that this effect is driven by men, with women having higher vaccination rates irrespective of the nudge treatment. JEL codes: C91, H1, 01, P5, I12, D91, A22, C93 Doctor of Philosophy This dissertation explores how policy changes in our environment, interact with our preferences and affect decision making in social decision making, healthcare and education domains. We explore macro policies designed to create country-level institutional changes, involving the legal system, monetary policy, trade and labor policy, as well as examining two individual-level interventions including targeted messaging to improve vaccination uptake, and course performance in introductory economics. These wide variety of policy interventions give us a wide spectrum of decisions to study across different domains. Chapter 2 examines the relationship between policy changes at the macro-institutional level and aggregate cooperative decision making. In this study, we establish a relationship between baseline institutional structure and changes in cooperative behavior corresponding to changes in societal level institutions. Our results suggests that current and historic societal level institutional structures should be kept in mind when designing policies. Chapter 3 explores the effect of messaging treatments targeting emotions on uptake of vaccination using a vignette experiment. Here, we study the effects on a particular emotion, betrayal aversion, which in our study, involves hesitancy related to the risk of getting betrayed in the context of vaccination. Our results suggest that a targeted messaging strategy, might prove to be effective in designing policies to improve vaccination uptake. Chapter 4 explores the impact of an active learning approach on class engagement and education outcomes of students in introductory economics. Providing students the chance to participate in a field experiment designed as a vaccination nudge, we incorporate the active learning component of the course and study the impact of participation in this active learning module. Our results suggest improved engagement and education outcomes among students who had the opportunity to participate in the experiment. Our results also suggest that proximity nudges might prove to be effective in improving vaccination uptake. We demonstrate the importance of designing context-specific policies for them to be instrumental in bringing about targeted change. At the aggregate country level, we find that similar type of policy interventions when introduced in countries with differing baseline institutional structures might lead to different results. At the individual level, we find evidence that targeted interventions does shape decisions. We find that targeted health communications messaging can lead to improvement in health behavior. We also find that introducing active learning modules improves learning outcomes among students. Taken together, the findings in this dissertation demonstrates how both economic preferences and underlying policies are important factors in decision making.

Psychology as well as philosophy often describe knowing as something exclusively positive and ignorance as unwanted state of mind. However, in certain situations, individuals demonstrate an unwillingness to know, contrasting theories arguing for a general need for certainty and ambiguity aversion. The research project serves in particular to examine more closely the circumstances in which such deliberate ignorance occurs as well as possible causes of this human phenomenon. Hypotheses are based on prior findings showing that the amount of willingness to remain deliberately ignorant (people deliberately forgoing potentially valuable, costless information) can supposedly be elicited by anticipated emotional costs of knowing (e.g., demonstrated for date of death or future faithfulness of partner). The study transfers this idea to the realm of betrayal, as it has been shown that people are generally averse to being betrayed, which is expected to lead to a form of willingness to remain deliberately ignorant in the face of potential betrayal. The main question is whether this kind of deliberate ignorance exists and, if so, what are potential drivers.

This study will investigate the correlations between trust in general persons, betrayal aversion, and the number of social ties using a general sample of Japanese people.

This is a pilot study aiming at fielding a model that we developed which captures the entirety of the behavioral drivers of the trusting decision from the point of view of the trustor or decision maker (DM). To achieve this, we devise a new task to measure trust, fashioned after certainty equivalents in decision-making under risk and uncertainty, which we refer to as trust equivalents (TEs). We eliminate one potential driver of behavior at a time so as to measure how behavior changes as single motivations are eliminated from the decision problem step after step. We field these tasks with a sample of 100 respondents in the UK. By fielding some additional measurements, we can furthermore structurally estimate the parameters of our model. To estimate our structural model, we develop a Bayesian random preference model.

Betrayal aversion is an important factor in the decision to trust. Trust in members of one’s own social group (ingroup members) is often higher than that in members of other groups (outgroup members). In this paper, I study (i) how betrayal aversion contributes to in-/outgroup discrimination in trust and (ii) how this contribution evolves as social groups solidify.

Betrayal aversion is an important factor in the decision to trust. Trust in members of one’s own social group (ingroup members) is often higher than that in members of other groups (outgroup members). In this paper, I study (i) how betrayal aversion contributes to in-/outgroup discrimination in trust and (ii) how this contribution evolves as social groups solidify.

Betrayal aversion is an important factor in the decision to trust. Trust in members of one’s own social group (ingroup members) is often higher than that in members of other groups (outgroup members). In this paper, I study (i) how betrayal aversion contributes to in-/outgroup discrimination in trust and (ii) how this contribution evolves as social groups solidify.

Previous research has documented a behavioral distinction between “social risk,” or risk caused by human factors, and natural risk. In particular, people tend to demand a premium on the probability of a favorable outcome in order to expose themselves to a social source of risk rather than a natural source of risk. Several explanations for what drives this social risk premium have been offered—most prominently, (i)an aversion to a counterparty’s potentially malign intentions and (ii) a more general aversion to ceding control to someone with conflicting interests. We propose that a fundamental determinant of the social risk premium may relate to a counterparty’s capacity to engage in intentional action. We employ a between-subjects experimental design in which we manipulate subjects’ capacity for intentional action. Our design allows us to identify the component of the social risk premium related to an aversion to betrayal, independent of any aversion to ceding control. Furthermore, our results show that intentions are a crucial determinant of the social risk premium. We identify factors that eliminate, and may even change the sign of, the social risk premium. Our results contribute to our understanding of the factors that influence the perception of social risk and have implications for optimal contract design in a wide variety of situations involving social risk. The online appendix is available at https://doi.org/10.1287/mnsc.2016.2694 . This paper was accepted by Uri Gneezy, behavioral economics.

In this paper we study the impact of betrayal aversion on agents' effort provision, when principals have discretion regarding agents' remuneration. We show theoretically that agents who work under a nonbinding bonus contract face a trade off in their effort choice between the likelihood and the level of betrayal. Thus, depending on which effect predominates, betrayal aversion may either undermine or underpin the effectiveness of bonus contracts to induce effort. The data of our experiment reveal a strong detrimental effect of betrayal aversion. If the principal promises to pay a bonus for sufficiently high effort, the message is ineffective when agents are characterized by a high degree of betrayal aversion. In strong contrast, employees with a low degree of betrayal aversion increase their performance by more than 50%, if they received this message. The findings in this article identify an additional hidden cost of economic incentives.

We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited.

The marked difference in the development of the North and the South of Italy represents a prototypical case of seemingly intractable within-country disparities. Recent research found that a plausible determinant of this socio-economic gap would be a difference in the ability to cooperate. Through a laboratory experiment we investigate whence this difference derives, whether from different preferences or from different beliefs. Our findings indicate that Northerners and Southerners share the same individual pro-social preferences, and that the cooperation gap lies rather in the pessimistic beliefs that Southerners have about their cooperativeness. Southerners, furthermore, manifest a stronger aversion to social risk, as compared to the risk of nature. A policy implication is that an intervention or an event that reduced pessimistic beliefs would directly boost cooperation levels.

Betrayal aversion has been operationalized as the evidence that subjects demand a higher risk premium to take social risks compared to natural risks. This evidence has been first shown by Bohnet and Zeckhauser (2004) using an adaptation of the Becker - DeGroot - Marschak mechanism (BDM, Becker et al. (1964)). We compare their implementation of the BDM mechanism with a new version designed to facilitate subjects' comprehension. We find that, although the two versions produce different distributions of values, the size of betrayal aversion, measured as an average treatment difference between social and natural risk settings, is not different across the two versions. We further show that our implementation is preferable to use in practice as it reduces substantially subjects' mistakes and the likelihood of noisy valuations.

Trust in policy makers fluctuates significantly over the cycle, evaporating during crises and affecting the transmission mechanism. Despite this, it is absent from the literature. We build a monetary model where trust emerges endogenously as an equilibrium of a strategic interaction (moral hazard with uncertainty on policy actions) between betrayal-averse agents and policy makers with stochastic incentives to deviate, conditioned on past policy outcomes as signals. A fall in trust, due to shocks or policy actions, increases the price that agents attach to future contingencies, amplifies fluctuations, and steepens the sacrifice ratio. We test the transmission of shocks through VAR analyses where trust is proxied by answers to the Eurobarometer surveys.

We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited.

Betrayal aversion has been operationalized as the evidence that subjects demand a higher risk premium to take social risks compared to natural risks. This evidence has been first shown by Bohnet and Zeckhauser (2004) using an adaptation of the Becker-DeGroot-Marshak mechanism (BDM, Becker et al. (1964)). We compare their implementation of the BDM mechanism with a new version designed to facilitate subjects' comprehension. We find that, although the two versions produce different distributions of values, the size of betrayal aversion, measured as an average treatment difference between social and natural risk settings, is not different across the two versions. We further show that our implementation is preferable to use in practice as it reduces substantially subjects' mistakes and hence the likelihood of noisy valuations.

In this article, we focus on two types of "aversion" which we deem essential aspects of the notion of trust: betrayal aversion (social) and ambiguity aversion (a special case of aversion to uncertainty). Based on trust-games studies in experimental economics and neuroeconomics, our main goal is to assess the conceptual, behavioral and neurobiological connections between betrayal and ambiguity aversions. From a social and individual psychological point of view the bottom line of our trusting behavior could be our general aversion to ambiguous signals. We approach social trust in the terms of a phenomenon based on uncertainty aversion.Specifically, a reduction of the perceived uncertainty of a social interaction tends to build up a trusting climate conducive to trade by decreasing betrayal aversion.We hypothesize that betrayal aversion and ambiguity aversion bear such a negative correlation. Focusing on this potential negative correlation our approach clearly differs from more positive accounts of trust centred on altruism.