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We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump‐shaped in a measure of intensity of trust beliefs. Our interpretation is that highly trusting individuals tend to assume too much social risk and to be cheated more often, ultimately performing less well than those with a belief close to the mean trustworthiness of the population. However, individuals with overly pessimistic beliefs avoid being cheated, but give up profitable opportunities, therefore underperforming. The cost of either too much or too little trust is comparable to the income lost by forgoing college. Our findings hold in large‐scale international survey data, as well as inside a country with high‐quality institutions, and are also supported by experimental findings. (JEL: A1, A12, D1, O15, Z1)

We investigate the relationship between individual trust and individual economic performance. We find that individual income is hump-shaped in a measure of intensity of trust beliefs. Our interpretation is that highly trusting individuals tend to assume too much social risk and to be cheated more often, ultimately performing less well than those with a belief close to the mean trustworthiness of the population. However, individuals with overly pessimistic beliefs avoid being cheated, but give up profitable opportunities, therefore underperforming. The cost of either too much or too little trust is comparable to the income lost by forgoing college. Our findings hold in large-scale international survey data, as well as inside a country with high-quality institutions, and are also supported by experimental findings. (JEL: A1, A12, D1, O15, Z1)

Using information on a large sample of retail investors and experimental data we find that risk aversion and risk ambiguity are correlated: individuals who dislike risk also dislike ambiguity. We show that what links these traits is the way people handle decisions. Intuitive thinkers are less averse to risk and less averse to ambiguity than individuals who base their decisions on effortful reasoning. We confirm this finding in a series of experiments. One interpretation of our results is that the high-speed of intuitive thinking puts intuitive thinkers at a comparative advantage in situations involving high risk and ambiguity, making them less averse to both. Consistent with this view we show evidence from the field and from the lab that intuitive thinkers perform better than deliberative thinkers when making decisions in highly ambiguous and risky environments. We also find that attitudes toward risk and ambiguity are related to different individual characteristics and wealth. While the wealthy are less averse to risk, they dislike ambiguity more, a finding that has implications for financial puzzles. JEL classification: D81; D83.

BackgroundResponsible gambling messages are widely used as a tool to enable informed choice and encourage appropriate gambling behavior. It is generally accepted that gamblers have different levels of risk of developing gambling problems and require various harm minimization tools and resources. Therefore, it is reasonable to expect that responsible gambling messages should be customized and target specific groups of gamblers. This project aimed to understand hypothesized differences between cohorts of gamblers and receive qualitative feedback on archetypal targeted messages used to increase use of responsible gambling tools.MethodsFocus groups were held to test messages for specific cohorts: young adults (18–24 years), seniors (60+ years), frequent gamblers (weekly), and gamblers of skill-based games (poker, sports betting).ResultsCohorts exhibited different preferences and responses to message archetypes. Seniors preferred messages about limit setting, whilst young adults and frequent gamblers responded to messages about their own play and expertise. Skill game gamblers were interested in the odds of winning and their own outcomes over time. However, all groups agreed that using positive, non-judgmental language in messaging is important.ConclusionsThis research makes an important contribution to the field by demonstrating that the wording of message content will likely influence the effectiveness of such messages differentially across various groups of gamblers for engaging gamblers in harm reduction tools. Guidance is provided on themes that can be used by public health marketers.Electronic supplementary materialThe online version of this article (10.1186/s12889-018-6281-0) contains supplementary material, which is available to authorized users.