Who Do You Trust? Institutions That Constrain Leaders Help People Prevent Disaster

We are vulnerable to disasters, yet citizens hesitate to spend on disaster prevention. Is this because the problem is too complex? Or are citizens concerned political elites will behave poorly? Using an experimental economic game that simulates disaster, we tested whether people can understand when an institution incentivizes elites to exaggerate the cost of disaster prevention. Citizen players could contribute money to prevent disaster. Leader players knew the cost of prevention and reported it to citizens, with the option to exaggerate. We manipulated whether the institution allowed leaders to personally benefit if citizens contributed too much. Citizens were sensitive to this, trusting the leader less and contributing less when leaders could benefit from exaggeration. Thus, players could discriminate between institutions that did and did not create incentives for inefficiency. This helps clarify why voters might oppose spending on disaster prevention and sheds light on the nature of voter rationality.