Decisions are said to be 'risky' when they are made in environments with uncertainty caused by nature. By contrast, a decision is said to be 'trusting' when its outcome depends on the uncertain decisions of another person. A rapidly expanding literature reveals economically important differences between risky and trusting decisions, and further suggests these differences are due to 'betrayal aversion'. While its neural foundations have not been previously illuminated, the prevailing hypothesis is that betrayal aversion stems from a desire to avoid negative emotions that arise from learning one's trust was betrayed. Here, we provide evidence from an fMRI study that supports this hypothesis. In particular, our data indicate that the anterior insula modulates trusting decisions that involve the possibility of betrayal.

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The clinical diagnosis and symptoms of major depressive disorder (MDD) have been closely associated with impairments in reward processing. In particular, various studies have shown blunted neural and behavioral responses to the experience of reward in depression. However, little is known about whether depression affects individuals’ valuation of potential rewards during decision-making, independent from reward experience. To address this question, we used a gambling task and a model-based analytic approach to measure two types of individual sensitivity to reward values in participants with MDD: ‘risk preference,’ indicating how objective values are subjectively perceived, and ‘inverse temperature,’ determining the degree to which subjective value differences between options influence participants’ choices. On both of these measures of value sensitivity, participants with MDD were comparable to non-psychiatric controls. In addition, both risk preference and inverse temperature were stable over four laboratory visits and comparable between the groups at each visit. Neither valuation measure varied with severity of clinical symptoms in MDD. These data suggest intact and stable value processing in MDD during risky decision-making.

Research on betrayal aversion shows that individuals’ response to risk depends not only on probabilities and payoffs, but also on whether the risk includes a betrayal of trust. While previous studies focus on measuring aggregate levels of betrayal aversion, the connection between an individual’s own betrayal aversion and other individually varying factors, including risk preferences, are currently unexplored. This paper develops a new task to elicit an individual’s level of betrayal aversion that can then be compared to individual characteristics. We demonstrate the feasibility of our new task and show that our aggregate individual results are consistent with previous studies. We then use this classification to ask whether betrayal aversion is correlated with risk aversion. While we find risk aversion and betrayal aversion have no significant relationship, we do observe that risk aversion is correlated with non-social risk preferences, but not the social, betrayal related, risk component of the new task.

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Sacrifice is widely believed to enhance cooperation in churches, communes, gangs, clans, military units, and many other groups. We find that sacrifice can also work in the lab, apart from special ideologies, identities, or interactions. Our subjects play a modified VCM game—one in which they can voluntarily join groups that provide reduced rates of return on private investment. This leads to both endogenous sorting (because free-riders tend to reject the reduced-rate option) and substitution (because reduced private productivity favours increased club involvement). Seemingly unproductive costs thus serve to screen out free-riders, attract conditional cooperators, boost club production, and increase member welfare. The sacrifice mechanism is simple and particularly useful where monitoring difficulties impede punishment, exclusion, fees, and other more standard solutions.

Many studies demonstrate the social benefits of cooperation. Likewise, recent studies convincingly demonstrate that betrayal aversion hinders trust and discourages cooperation. In this respect, betrayal aversion is unlike socially “beneficial” preferences including altruism, fairness and inequity aversion, all of which encourage cooperation and exchange. To our knowledge, other than the suggestion that it acts as a barrier to rash trust decisions, the benefits of betrayal aversion remain largely unexplored. Here we use laboratory experiments with human participants to show that groups including betrayal-averse agents achieve higher levels of reciprocity and more profitable social exchange than groups lacking betrayal aversion. These results are the first rigorous evidence on the benefits of betrayal aversion, and may help future research investigating cultural differences in betrayal aversion as well as future research on the evolutionary roots of betrayal aversion. Further, our results extend the understanding of how intentions affect social interactions and exchange and provide an effective platform for further research on betrayal aversion and its effects on human behavior.

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