Skip to main content

Guilt aversion verus lie aversion, the case of Donald Trump and Hilary Clinton

One of the more bizarre aspects of the recent US Presidential election campaign was the ability of Donald Trump to tell more lies and half-truths than most of us would do in a lifetime and yet still claim that Hilary Clinton could not be trusted in office. Even more bizarre, was the fact that he got away with it! How can we possible make sense of this? Some might point to a dumb electorate. I think we can learn more by looking at guilt aversion.
             The concept of guilt aversion was formally introduced into game theory by Pierpaolo Battigalli and Martin Dufwenberg with a paper published in the American Economic Review in 2007. (I should also mention a paper by Gary Charness and Martin Dufwenberg in Econometrica in 2006.) The basic idea is that a person only needs to feel guilt if they disappoint the expectations of others. To illustrate, consider Donald Trump's 'promise' to lock up Hilary Clinton. Nobody realistically expects Trump to fulfil this promise. But, because nobody realistically expects him to lock her up then he needs to feel no guilt making and breaking the promise. It is all cheap talk.
              If everything is all cheap talk then Trump can say what he likes, nobody can believe it, he can predict that nobody will believe it, and everything works out fine! And it is noticeable that post election none of his supporters seem particularly upset that many campaign promises have fallen by the wayside. The only promise people seem to really care about is his promise of trying to make America great again. If he does not fulfil on that promise then he really should feel guilt.
            Hilary Clinton, by contrast, seems to have been judged by different standards. She is expected to tell the truth and nothing but the truth. Which is presumably why the email controversy took on such a huge importance. Any sign that she had let down expectations was taken as a signal that she could not be trusted.
           Ultimately, though, this meant we have a good idea what Hilary was intending to do as President. With Donald Trump, by contrast, we don't have a clue. We have a good idea about some things he will not do - lock up Hilary, build a wall on the Mexican border etc. - but beyond that it is uncertainty. Usually uncertainty is a bad thing and Trump would not have had a chance. We seem to live in a world, however, where uncertainty is becoming ever more appealing to voters. That opens the door for a whole lot more bullshit in the future.
            Interestingly, the evidence of guilt aversion in the experimental lab is mixed. In particular, there is a fair amount of evidence for lie aversion. The basic idea here is that a person feels bad if they lie. In this case it is irrelevant whether or not anybody expects the person to keep their promise, the person simply does not like to break their promise. So, Donald Trump would feel averse to making a promise he knows he cannot keep. Which does not sound much like Donald Trump.
                   

Comments

Popular posts from this blog

Revealed preference, WARP, SARP and GARP

The basic idea behind revealed preference is incredibly simple: we try to infer something useful about a person's preferences by observing the choices they make. The topic, however, confuses many a student and academic alike, particularly when we get on to WARP, SARP and GARP. So, let us see if we can make some sense of it all.           In trying to explain revealed preference I want to draw on a  study  by James Andreoni and John Miller published in Econometrica . They look at people's willingness to share money with another person. Specifically subjects were given questions like:  Q1. Divide 60 tokens: Hold _____ at $1 each and Pass _____ at $1 each.  In this case there were 60 tokens to split and each token was worth $1. So, for example, if they held 40 tokens and passed 20 then they would get $40 and the other person $20. Consider another question: Q2. Divide 40 tokens: Hold _____ at $1 each and Pass ______ at $3 each. In this case each token given to th

Nash bargaining solution

Following the tragic death of John Nash in May I thought it would be good to explain some of his main contributions to game theory. Where better to start than the Nash bargaining solution. This is surely one of the most beautiful results in game theory and was completely unprecedented. All the more remarkable that Nash came up with the idea at the start of his graduate studies!          The Nash solution is a 'solution' to a two-person bargaining problem . To illustrate, suppose we have Adam and Beth bargaining over how to split some surplus. If they fail to reach agreement they get payoffs €a and €b respectively. The pair (a, b) is called the disagreement point . If they agree then they can achieve any pair of payoffs within some set F of feasible payoff points . I'll give some examples later. For the problem to be interesting we need there to be some point (A, B) in F such that A > a and B > b. In other words Adam and Beth should be able to gain from agreeing.

Some estimates of price elasticity of demand

In the  textbook on Microeconomics and Behaviour with Bob Frank we have some tables giving examples of price, income and cross-price elasticities of demand. Given that most of the references are from the 70's I'm working on an update for the forthcoming 3rd edition. So, here is a brief overview of where the numbers come from for the table on price elasticity of demand. Suggestions for other good sources much appreciated. Before we get into the numbers - the disclaimer. Price elasticities are tricky things to tie down. Suppose you want the price elasticity of demand for cars. This elasticity is likely to be different for rich or poor people, people living in the city or the countryside, people in France or Germany etc.etc. You then have to think if you want the elasticity for buying a car or using a car (which includes petrol, insurance and so on). So, there is no such thing as the price elasticity of demand for cars. Moreover, the estimated price elasticity will depend o