Citation

Goerg SJ, Hennig-Schmidt H, Walkowitz G, Winter E. PLoS One 2016; 11(6): e0156998.

Affiliation

The Center for the Study of Rationality, The Hebrew University of Jerusalem, Jerusalem, Israel.

Copyright

(Copyright © 2016, Public Library of Science)

DOI

10.1371/journal.pone.0156998

PMID

27311066

Abstract

The reconcilability of actions and beliefs in inter-country relationships, either in business or politics, is of vital importance as incorrect beliefs on foreigners' behavior can have serious implications. We study a typical inter-country interaction by means of a controlled laboratory investment game experiment in Germany, Israel and Palestine involving 400 student participants in total. An investor has to take a risky decision in a foreign country that involves transferring money to an investee/allocator. We found a notable constellation of calibrated and un-calibrated beliefs. Within each country, transfer standards exist, which investees correctly anticipate within their country. However, across countries these standards differ. By attributing the standard of their own environment to the other countries investees are remarkably bad in predicting foreign investors' behavior. The tendency to ignore this potential difference can be a source of misinterpreting motives in cross-country interaction. Foreigners might perceive behavior as unfavorable or favorable differentiation, even though-unknown to them-investors actually treat fellow-country people and foreigners alike.

Language: en