Guzman - Should I Trust The Bank or The Social Movement

Sociological Forum, Vol. 30, No.
4, December 2015
DOI: 10.1111/socf.12201
© 2015 Eastern Sociological Society
“Should I Trust the Bank or the Social Movement?” Motivated

Reasoning and Debtors’ Work to Accept Misinformation1
Sebasti an2
an G. Guzm
How can people believe corporate and state misinformation even if a social movement organization in their
community has been countering this misinformation for years? Why do people knowingly accept misinforma-
tion without even being upset about it? I address these questions by analyzing ethnographic data and inter-
views with 84 Chilean low-income housing debtors, whom, like many Chileans, are victims of financial
misinformation. While the state and banks had significant agency in inducing the unproblematic acceptance
of misinformation, debtors also played an active role in the processes. First, debtors had to decide whom to
trust, which was not only a cognitive problem about evidence but also a behavioral and practical problem
involving risks. Second, debtors engaged in “motivated reasoning”—affect-driven biased information process-
ing—to dismiss the possibility of being misinformed, to downplay the significance of misinformation, and to
direct blame away from misinforming institutions. The latter two practices reduced debtors’ anger about
being misinformed. The findings have implications for studies of social movement framing and counterinfor-
mation, for the cognitive psychology of misinformation, and for the sociology and social psychology of
acquiescence.
KEY WORDS: Debt; framing and counterframing; misinformation; motivated reasoning; social move-
ments; social psychology.
INTRODUCTION
In Chile, a large share of social (low-income) housing is sold by private devel-

opers and financed by a combination of state subsidies, individual savings, and
bank loans. Since 2007, the National Association of Home-Mortgage Debtors
(ANDHA-Chile) and its splinter groups organized thousands of social housing
debtors to collectively default and thus pressure the state to cancel their mortgages.
Since then, the government and banks have agreed to put a moratorium on foreclo-
sures, until a solution for the debtors’ demands is found. In the meantime, however,
banks have not stopped pressuring defaulted debtors to pay or to pay more. They
use false threats to foreclosure or false incentives for resuming payments, among
other misinformation practices common in the Chilean finance industry (detailed
below). Members of debtors’ social movement organizations (SMOs) reported in
1
I thank Rachel Sherman, Bob Zarrow, and three anonymous reviewers for their extremely helpful com-
ments on drafts of the manuscript. I am also grateful to my informants for their openness and time to
talk. Versions of this paper were presented at the NYU NYLON Workshop, the New School for Social
Research Sociology Brown Bag Series, and the 2015 American Sociological Association Meeting.
Research for this project was made possible by the New School for Social Research Dissertation Fel-
lowship and the Elinor G. Black Dissertation Fellowship for Advanced Studies in the Dynamics of
Social Change.
2
Facultad de Educaci on, Universidad Andres Bello, Fernandez Concha 700, Edificio C-2 Piso 3, Las
Condes, Santiago, Chile; e-mail: sebastian.guzman.r@unab.cl
900
Motivated Reasoning and Debtors’ Work to Accept Misinformation 901
interviews and ethnographic observation that when collectors called, they simply
responded, “I’m a debtor with ANDHA-Chile” and collectors gave up, anticipating
that the call was a waste of time. However, when collectors threatened nonmembers
in default with an imminent foreclosure next month, nonmembers sometimes
believed the threat and even took high-interest loans from other lenders to cover
their late installments. How could some debtors still believe collectors’ threats, after
many years of a moratorium on foreclosures—even when a debtors’ SMO existed in
their neighborhood? To put the puzzle more abstractly: how can people trust insti-
tutional agents’ misinformation after an SMO in the community has offered coun-
terinformation or warned about institutional misinformation practices for years?
The intuitive answer to the question is that SMOs did not do a good job at
countering misinformation. This is part of the answer. But the question is more puz-
zling if we consider that debtors, including SMO members, trusted these institu-
tions’ misinformation even when they had heard about the banks’ and the state’s
misinformation practices and the moratorium. Knowing this, some debtors did not
even seek alternative information. Some signed loan modifications they did not
understand, having heard about cases of unilateral change of terms of loans with
new unexplained charges—a practice common in Chile, as many court cases show.
They then tried to overcome their ambivalences and fears by convincing themselves
they would not be scammed. Finally, not only did debtors sometimes knowingly
accept being misinformed but they also did not even bother about this much and
made efforts to downplay its importance. These findings are puzzling because they
differ from those of previous social movement research. Previous narratives state
that, when people realize they have been deceived by institutional agents, even those
used to being misinformed become upset and frustrated with institutions, complain
about them, lose trust in them, and believe activists’ counterinformation instead
(Auyero 2012; Beamish 2002; Brown 1992; Cable and Walsh 1991; Edelstein 1988;
Robinson 2009). The case of Chilean debtors shows that such predictions are not
always true.
Thus, to understand why people trust institutional misinformation—incorrect
or insufficient information that is available to the institution—when an SMO is
counterinforming, I ask two questions: (1) why and how do misinformed people
come to dismiss SMOs’ counterinformation and trust institutions when they have
valid information about agents’ deceiving practices?; and (2) why and how do they
knowingly accept being misinformed, without complaining?
These are important questions for our understanding of the relationship
between misinformation and acquiescence and for studies of social movement fram-
ing and counterframing. We have begun to learn how people understand and accept
authorities’ misinformation and “labor of confusion” and how such labor can
induce acquiescence, particularly when misinformation is not being challenged
(Auyero and Swistun 2009). But as Auyero and Swistun (2009:7) point out, studies
of SMOs countering incorrect or hidden information tend to present a fluid story
about a community overcoming misinformation once leaders begin to counterin-
form (e.g., Beamish 2002; Brown 1992; Cable and Walsh 1991; Levine 1982).
Edelstein (1988) showed that it is psychologically difficult to acknowledge one has
been misinformed, notably, because it creates cognitive dissonance—for example,
902 Guzman
“I acted like a fool, but I am not a fool.” Perhaps because of the case he studied, he
suggests that community organizations offer ways to cope with misinformation and
acknowledge it. Yet this is not always the case. Only recently have we begun to
understand the difficulties SMO leaders face when trying to contradict institutional
misinformation. Our incipient knowledge about these difficulties is limited to
extreme and rare cases in which movements communicate information that goes
beyond the “limits of [people’s] imagination”—for example, that Nazis were plan-
ning to kill all Jews, including those working for them (Einwohner 2009). We still
need more research on the challenges of counterinforming, especially in the more
common case in which counterinformation is within the limits of the imaginable.
To answer the first research question, I indicate one constraint to trust in
SMOs’ counterinformation and two inducements to trust institutional misinfor-
mation. First, trust in information is a cognition—the belief that the trusted
actor’s claims are true and truthful—but specifically one associated with commit-
ments or behaviors (Sztompka 1999:25–29).3 It does not suffice to believe certain
information; the trusting actor must act as if the information is true. The impor-
tant constraint then is that trusting an SMO rather than a misinforming institu-
tion like a bank or the state often involves risks that debtors may not be willing
to take. The theoretical implication is that people do not just believe information
of previously trusted actors; rather, they have to decide whom to trust, but this
decision involves previous beliefs and emotions, especially fear. People tend to
trust misinformation from those who can create perceived risks for distrusting
them, even if they take an antagonistic stance as the bank does. Thus, trust in
misinforming or counterinforming actors is neither a learned disposition nor a
rational evaluation, as other acts of trust are generally understood (for a review,
see Nannestad 2008).
Second, statements made in the name of an institution such as a bank carry a
credibility in the ears of nonmembers that is lacking in the speech of SMO leaders
and that induces trust in institutions—at least in some countries. This is no surprise
for Bourdieu (1991) and his followers in political sociology. Yet it is a relevant con-
tribution for social movement studies, which acknowledge the importance of frame
articulators’ credibility differentials but had not, until now, identified the challenge
that institutional speech poses for SMOs (Benford and Snow 2000).
Third, debtors’ desires to believe that the bank did not misinform them moti-
vated debtors to engage in biased information processing to dismiss the idea that
they were being misinformed. In other words, they engaged in what cognitive and
social psychologists call (directionally) “motivated reasoning”: emotionally driven
biased cognitive processing, aimed toward reaching a desired conclusion rather than
the most accurate one (Kunda 1990)—that is, aimed in a direction defined before-
hand. Theories of nonmotivated biased reasoning argue that people reach wrong
conclusions because they are constrained by strictly cognitive limitations, such as
prior beliefs, available information, and processing time (Tversky and Kahneman
1974). In contrast, hundreds of studies on motivated reasoning have shown that
3
Tilly (2004:4) similarly defined trust as the act of “placing valued outcomes at risk to others’ malfea-
sance.” My focus on trust in information adds a stress on beliefs.
people believe what they want to believe for emotional reasons. There are numerous
motives that can drive reasoning processes. Debtors in this article appeared to
engage in three of the several forms of motivated reasoning: (1) “wishful thinking”
(Buehler, Griffin, and MacDonald 1997); (2) reducing “cognitive dissonance” (Fes-
tinger 1957; Kunda 1990); and (3) reactance to being told what to think—I explain
these variants soon.
These findings have important theoretical implications for our still rather
“descriptive” understanding of framing and counterframing processes (Benford and
Snow 2000:626). Framing refers to SMOs’ generation of frames or “action-oriented
sets of beliefs and meanings that inspire and legitimate” their activities (2000:614).
Counterframing refers to the “attempts to rebut, undermine, or neutralize a per-
son’s or group’s” frame (Benford 1987:75). Social movement framing and counter-
framing can include misinforming and counterinforming when the latter two refer
to promoting beliefs that inspire movement activity or inactivity (Einwohner 2009;
Gallo-Cruz 2012). This is the case, for instance, of some “prognostic framing”
about what will happen if one protests. Benford and Snow argue that whether
frames resonate with members or potential members depends largely on the frames’
salience to the targets of mobilization and their credibility. The former is theorized
as a function of centrality, experiential commensurability, and narrative fidelity,
while the latter is explained as a function of the frames’ consistency, empirical credi-
bility, and the frame articulators’ credibility—derived from their status. Unfortu-
nately, Benford and Snow’s focus on resonance portrays frames’ audience as
passive actors. They grant all agency to SMOs, their leaders, and their adversaries,
who spread interpretations or ideas, and overlook the agency that people have in
“deciding”—perhaps not consciously—which frame to believe or take as if it were
credible. By explaining how credibility also depends on framing targets’ pragmatic
evaluations about the risks of accepting a frame and their affective desires to accept
it, I show that frame credibility is more dynamic than what Benford and Snow
suggest.
These findings are also important for the cognitive and social psychology of
misinformation and of decisions under uncertainty. Some psychologists draw on
cognitive theories to explain specifically responses to misinformation and its cor-
rections, which I here call counterinformation (see Lewandowsky et al. 2012 for
a review). In contrasts with sociologists’ field observations of SMO counterinfor-
mation, laboratory experiments with corrections of misinformation show that
people do not easily overcome misinformation (Johnson and Seifert 1994; Wilkes
and Leatherbarrow 1988). Among other reasons, people engage in “reactance”
when they are told what to think, because that feels like an elimination of their
freedom (Brehm and Brehm 1981; Lewandowsky et al. 2012:116 for a discussion
of reactance and misinformation). Furthermore, people do not correct their views
even when they have been warned that they may be misinformed (Ecker, Lewan-
dowsky, and Tang 2010); although people suspicious of misinformation about
specific issues are sensitive to corrections of misinformation on those issues
(Lewandowsky et al. 2005). The contrast with sociologists’ works could result
from not studying SMOs; yet my case suggests that psychologists’ findings may
apply to SMOs.
904 Guzman
Unfortunately, most of this psychological research focuses on situations in

which beliefs in misinformation or counterinformation do not involve material or
emotional costs or benefits. This is paradoxical, since the field owes much to Fes-
tinger, Riecken, and Schnachter’s (1956) study of sect members’ resistance to dis-
believe misinformation to which they had previously committed. Furthermore,
well-known findings about how people often prioritize emotional desires to reach
biased conclusions over material incentives for reaching accurate conclusions, sug-
gest that the effect of incentives is not straightforward and requires further atten-
tion (Buehler et al. 1997). In spite of these findings, current research focuses on
nonmotivated (purely cognitive) limitations to accept counterinformation or, more
recently, on the role of motivation to confirm preconceptions (e.g., Ecker et al.
2014; Nyhan and Reifler 2010). Auyero and Swistun (2009) began to break the
tendency of focusing on cases in which beliefs in misinformation did not involve
costs. They looked at pragmatic responses to misinformation in a community with
no counterinformation and applying the insights from the literature on nonmoti-
vated heuristics and biases. My study picks up their thread to understand
responses to counterinformation. In addition, by focusing on the behavioral deci-
sion to trust, I bring in people’s pragmatic considerations about risks involved in
trust as well as the role of other forms of motivated reasoning, such as wishful
thinking. The insights from combining my ethnographic data, motivated reason-
ing, and the pragmatic problem of trust inform new hypotheses for the psychology
of misinformation.
In answering the second question—about why people accept misinformation—
I argue that three forces explain this acceptance. First, counterinformation is per-
ceived as costly. Second, the state and banks make misinformation the norm and
debtors come to expect it and see it as inevitable. Third, some debtors engaged in
motivated reasoning to make misinformation less upsetting: they downplay misin-
formation and direct blame away from the misinforming institutions. Taken
together, these forces explain why people do not necessarily confront misinforma-
tion when it is exposed—in contrast to what most sociologists would have us expect
(Beamish 2002; Brown 1992; Edelstein 1988; Levine 1982; Robinson 2009).
My answer to the second question is not only important for the sociology of
acquiescence and resistance to misinformation or misinforming actors, but it also
has implications for the study of acceptance of oppression. The most prominent
and developed theories on the topic are Belief in a Just World Theory (Lerner 1980)
and System Justification Theory (Jost and Banaji 1994). These theories propose that
individuals engage in motivated reasoning to maintain beliefs in a just world—for
example, victim blaming—or justify the status quo, because this helps them reduce
anxiety, guilt, dissonance, discomfort, and uncertainty. These justifications help
people feel better about the status quo and their place in society and leads people to
feel more positive emotions and less negative ones (Jost and Hunyady 2005). Partly
in consonance with these theories, my findings suggest other motivated reasoning
mechanisms that lead people to feel better about oppression: directing blame away
from the system, toward themselves or random factors such as luck—a variant of
Lerner’s (1980) victim blaming; and downplaying the significance of
misinformation.
910 Guzman
monthly payments, Samuel inquired at the government’s Housing and Urbanism

Service. One agent told Samuel it was a problem between him and the bank. A
supervisor offered to file a complaint, but the response, months later, was that
Samuel should address the matter with the bank. An agent at the government’s
National Service for Customers offered to send a letter to the bank demanding an
explanation, but after a month they simply replied that the bank had not
responded.
Finally, but perhaps most importantly, agents lied about the consequences of
not paying. In spite of the informal moratorium on foreclosures initiated in 2007,
banks normally sent letters informing of a lawsuit for foreclosures on defaulted
loans, as required by the law to collect the state guarantee on the loans. Yet these
attempts to collect debt were not just a legal obligation, but they also worked as a
technique to pressure debtors in default back on track with their payments. This is
evidenced by insistent phone calls to collect the debt with false threats of foreclosure
or seizure of property, which are not required to collect the guarantee. Collectors
and bank agents also told debtors that by modifying their defaulted loan and pay-
ing again, they would be more likely to qualify for new subsidies on monthly pay-
ments, which is not true. Finally, bank and state agents misinformed about the
consequences of missing a mortgage payment. This led some debtors to believe that
if they missed a payment they would lose the subsidy for on-time payments forever,
while in fact they would only lose the subsidy for late payments.
Through these four misinformation practices, agents articulate misinforming
frames about what will happen depending on debtors’ actions or about what is at
stake in an exchange—for example, a legal charge or an abuse, one or two loans, a
problem involving the state or not, and so forth. Debtors’ adoption of these misin-
forming frames allowed the state to restrict the use of subsidies and allowed banks
to increase profits through the payment of additional charges in insurance or loan
modifications, or by securing the uncertain payment of defaulted mortgages. The
analysis that follows shows debtors’ responses, which were similar for all four forms
of misinformation.
SMOS’ UNSYSTEMATIC COUNTERINFORMATION
As the reader may expect, an important part of the debtors’ SMOs’ job was to
counter the banks’ and the state’s misinformation. Perhaps the most important way
in which SMOs counterinformed was by informing about the moratorium on fore-
closures. ANDHA-Democr atico leaders reassured debtors who received letters or
calls with threats of foreclosures that the moratorium was still active. They
explained that those letters were a formality required by the state’s guarantee on the
loan and that collectors are just trying to reactivate their debt—which, by law,
should expire after five years without payment. They also explained that the two
evictions in the neighborhood were not related to foreclosures of mortgage debtors
but only to termination of rent-to-own tenants’ contracts.8 While some members
panicked the first time they received a threatening letter, the leaders’ reassurance led
8
Some ANDHA members thought that only organized debtors were protected from foreclosures.
906 Guzman
visits in 2013 and 2014. Most of this time, I lived in a social housing neighborhood
of about 1,200 houses that I call Las Lilas. I recorded 48 neighborhood and
metropolitan SMO meetings. These allowed observing how members and nonmem-
ber attendants discussed how to interpret bank and state agents’ information and
how leaders shared counterinformation. I also followed many debtors to the bank,
municipal social assistance offices, and the Housing and Urbanism Service (the
regional division of the Ministry).5 This allowed observing misinformation practices
firsthand—assuming that debtors could wrongly report misunderstandings as
misinformation—and how debtors responded to them.6
Finally, I had innumerable informal conversations with homeowners and lead-
ers, often looking at the paperwork with contracts and details of unexplained
charges they received and discussing what they thought of the information received
in meetings and from institutional agents. Informal talks and interviews allowed
going deeper into thoughts not expressed in the “natural” interactions observed,
especially debtors’ (often-ambivalent) thoughts on misinformation and how they
justified their behavior. During informal conversations and interviews, I inquired
what debtors made out of (mis)information they had been exposed to. I dug into
their sometimes ambivalent thoughts about whether to trust one or another source
and their efforts to overcome their doubts and make or justify a decision. Following
Prasad et al. (2009), I sometimes suggested to debtors that the information they
had could be inaccurate or provided information they asked me about. This allowed
hearing how debtors responded to such a possibility and justified their decision to
believe certain information or trust a source. In some of these situations, it was not
clear whether institutional information was accurate or not, but debtors’ response
about the possibility of being misinformed is still illustrative of why they trusted a
source with a record of misinformation. I typically recorded voice notes immedi-
ately after observations and conversations and wrote more detailed notes as soon as
possible.
I also interviewed debtors from 75 households, 57 in Las Lilas. Sometimes I
interviewed spouses or neighbors together to observe agreements and disagree-
ments, adding a total of 84 interviewees. I interviewed 12 debtors twice in different
years and conducted follow-up conversations in 2012 for almost all other infor-
mants interviewed in 2011. This allowed checking debtors’ interpretations of infor-
mation after a change in membership or payment status, and after their encounters
with bank and state agents. Because data was collected for a broader study, only
interviews with 38 debtors in organized neighborhoods dealt with misinformation,
20 of whom trusted or accepted misinformation at some point—mostly as nonmem-
bers. I recorded all but nine of the interviews, and for these I recorded or wrote
detailed notes. Interviewees were selected by a combination of snowball and inten-
tional sampling to increase trust and variation in terms of leadership status, SMO
membership, paying status, change in paying status, eligibility for subsidies, gender,
and neighborhood of residence.7 All informants’ names, except those of national
5
As part of the larger project from which this article stems, I also attended other events.
6
I did not observe threats of foreclosure firsthand, but most debtors reported receiving them.
7
Interviewees contacted without snowball sampling almost always demonstrated trust by talking about
their lies in the Social Welfare Record in order to be eligible for means-tested debt relief.
leaders, are replaced by pseudonyms to protect their anonymity. I interviewed debt-

ors and SMO members in Las Lilas, in other neighborhoods where debtors’ SMOs
exist, and in unorganized neighborhoods. Additionally, I interviewed an adviser of
the Ministry of Housing and Urbanism who dealt with debtors for almost a decade
and the former president of BancoEstado (StateBank)—the autonomous state-
owned bank, which granted almost all of the social housing mortgages with financ-
ing from mortgage-backed securities sold to investors.
Like most social housing owners, Las Lilas’s dwellers are working class, with
wide variation of income. Like in most neighborhoods made up of this type of hous-
ing, homeowners appeared concentrated in the three middle-income quintiles—offi-
cial data of the neighborhood are meaningless because many dwellers lied about
their income in order to receive debt relief.
Las Lilas was one of the few neighborhoods with a local chapter of the two lar-
gest SMOs that splintered from the original and now-defunct ANDHA Chile. This
was a particularly important factor in the case selection for the broader study from
which the findings here reported stem from, although not for the findings on
responses to misinformation.
The largest SMO, with between 400 and 800 members in Las Lilas at its peak
(depending on the account) and 80 members in 2011, was ANDHA Chile A Luchar
(hereafter simply “ANDHA,” as people often call it). This SMO engaged in a rela-
tionship of political clientelism with the 2010–2014 president, Sebastian Pi~ nera,
when it mobilized electoral support for the 2010 runoff election in exchange for a
promised “solution” to the debt problem. During most of the Pi~ nera administra-
tion, ANDHA did not protest. In 2013, just before the new presidential election,
1,217 members of ANDHA (three from Las Lilas) and some smaller SMOs received
full debt-relief subsidies. Almost all other members, in default until late 2011 or
2012, resumed paying with a partial subsidy. The second group, with 30 members in
Las Lilas in 2011, all in default, was ANDHA Chile A Luchar-Democratico (here-
after “ANDHA-Democr atico”). It splintered from ANDHA during the 2010 presi-
dential runoff campaign and supported a class-struggle and confrontationist
strategy. Its leaders allied with other working-class SMO leaders, including other
debtors’ SMO leaders, to form the Equality (Igualdad) Party, and presented
ANDHA-Democr atico’s main leader, Roxana Miranda, as presidential candidate
in 2013.
Access to ANDHA-Democr atico was granted through the endorsement of an
acquaintance who is a leader of the Equality Party. Access to ANDHA was limited
because of their policy of organizational secrecy. Thus, five members rejected an
interview, while eleven members granted interviews and another three talked in
informal conversations. The sample could be skewed against members who were
closer to the leadership and thus more informed and cautious about secrecy. How-
ever, this is partly compensated by conversations before the local leader specifically
instructed block delegates not to talk to me and by three interviews with members
from neighborhoods where leaders had not given such instructions. Another source
of potential bias could be that I tend to support—albeit critically—ANDHA-
Democr atico’s perspective on several issues. Being aware of this, I have strived to
be neutral in the fieldwork and analysis. For instance, often in response to questions
imaginable or is not available—although cognitive psychology predicted the oppo-

site. Furthermore, we had learned that people tend to side with counterinforming
SMOs as soon as people realize they are being misinformed by corporations or the
state. However, the case of Chilean social housing debtors shows that this is not
always true. Counterinformation is more difficult than sociologists have suggested.
I have tried to understand why this is the case by addressing two specific ques-
tions. First, why did misinformed debtors distrust the SMOs’ counterinformation? I
showed that beyond possible cognitive biases that psychologists of misinformation
have found, there were at least one constraint to debtors’ trust in SMOs’ counterin-
formation and two inducements to trust institutions like the bank and state: (1)
trusting SMOs counterinformation involved risks debtors were hesitant to take; (2)
speech in the name of an institution carried a certain credibility that SMO leaders’
speech does not have in the ears of nonmembers; and (3) debtors actively tried to
dismiss the possibility that they were being misinformed by institutions—that is,
they engaged in motivated reasoning. This reasoning was probably motivated by
debtors’ wish not to be misinformed (a form of “wishful thinking”); by efforts to
avoid the “cognitive dissonance” between their high self-image and the thought that
they had acted foolishly by trusting the institution; or as “reactance” against being
told what to think. Together, these findings suggest that, while previous dispositions
and beliefs affect trust, debtors have a more active role in deciding beliefs than
social movement theories previously suggested.
Second, I asked why debtors accepted misinformation even when they knew
they were being deceived. I found three factors that explain this puzzle: (1) there
were costs to counterinformation, notably, SMOs’ demands for participation, loss
of pride in asking for help after abandoning an SMO, and possible loss of benefits
threatened by the state; (2) debtors expected misinformation given its frequency and
the banks’ and the state’s lessons that there is nothing to do against misinformation;
(3) debtors directed blame for misinformation away from institutions and down-
played its significance, consequently diminishing their anger about misinformation.
Taken together, these findings suggest that, while there are external inducements to
accepting misinformation peacefully, debtors also play an active role in doing so.
Of course, my findings are not free of limitations, which further research could
address. First, the case studied may not have allowed identifying some factors
affecting trust. For instance, it is likely that people are better disposed to trust SMO
countering state misinformation in countries where corruption is more pervasive.
Social capital may also affect trust in counterinformation. Membership in certain
groups, such as churches, may increase or decrease social trust—although my lim-
ited data on non-SMO memberships did not suggest any pattern. Future research
could better identify and explore the role of such macro- and meso-level factors.
Second, further questions arise about how SMOs can gain trust if individuals are
socialized to trust authority. Third, some interpretations are admittedly inconclu-
sive and require further examination.
Beyond those limitations, these findings have significant implications. First,
they contribute to our knowledge of how misinformation works and produces
acquiescence. Contrary to what previous scholarship had implied, having an SMO
spread potentially believable counterinformation systematically is not necessarily
THE BANKS’ AND THE STATE’S MISINFORMATION PRACTICES
Court decisions and news have revealed that Chileans often experience misin-
formation fraud by financial and other agents (e.g., Barrionuevo 2011; El Mercurio
2013; La Tercera 2010, 2011; Soto 2012). My informants also experienced these
practices. The bank that manages 95% of social housing mortgages, BancoEstado,
has also been involved in these scandals. These are all cases of clear misinformation
by the agents, not simply misperceptions by borrowers.
A common fraud reported in court and news scandals and experienced by my
informants, was a unilateral change in terms and conditions of loans and finance
charges, often adding mysterious insurance charges without consent. Although
bank agents and loan modifications indicated that all insurance charges were
included in the price of their first monthly payment, after the second month of mod-
ifying defaulted loans and paying again, an uninformed insurance charge appeared
in mortgage statements. When Samuel (nonmember debtor) complained, bank
agents could not eliminate the charge even though he was unable to explain what it
was for.
A second form of misinformation fraud, experienced both by my informants
and the subjects of news and court cases, involves inducing debtors into transactions
without information about the terms and conditions. Some debtors were told to sign
loan modifications on a page where the cells indicating interest rate and number of
installments were left blank. I witnessed this practice with two different debtors.
The bank representative only provided a rough verbal estimate and told them that
the actual amounts would appear in the bill next month, after the loan modification
was signed and paid for. Another debtor received an unexplained statement for a
payment to be made in 2020. The statement apparently concerned a new loan she
had not been informed about, to cover interest accrued for defaulted months, to be
paid all at once after the mortgage is paid. ANDHA-Democratico’s main leader
reported seeing many cases of second loans about which debtors had not been
informed—a practice also uncovered by a court case of another bank.
Beyond frauds, state and bank agents engaged in other forms of misinforma-
tion. One of these forms was withholding information or giving inaccurate informa-
tion. Bank, state, and municipal agents typically provided very short answers
without explaining all the options, and often giving debtors no solution to their
requests, even when I assisted in asking questions. When two of the agents asked
who I was and I explained I was conducting research for a thesis, they changed their
attitude and explained more details in a friendly manner. Yet, even when agents
were friendly, they often did not have the necessary information to answer ques-
tions, frequently providing wrong information or continually redirecting debtors to
another office. For example, Samuel received information about a subsidy applica-
tion only after visiting five offices. Later in 2012, when Samuel asked a bank agent
why the third installment after the loan modification was more expensive, the agent
and supervisor only explained that it corresponded to an insurance, without specify-
ing what kind of insurance. Thus, Samuel will probably never use the insurance.
Since the subsidized loan modification indicated all insurance costs were included
before the new mysterious one, which almost completely annulled the subsidy on
910 Guzman
monthly payments, Samuel inquired at the government’s Housing and Urbanism

Service. One agent told Samuel it was a problem between him and the bank. A
supervisor offered to file a complaint, but the response, months later, was that
Samuel should address the matter with the bank. An agent at the government’s
National Service for Customers offered to send a letter to the bank demanding an
explanation, but after a month they simply replied that the bank had not
responded.
Finally, but perhaps most importantly, agents lied about the consequences of
not paying. In spite of the informal moratorium on foreclosures initiated in 2007,
banks normally sent letters informing of a lawsuit for foreclosures on defaulted
loans, as required by the law to collect the state guarantee on the loans. Yet these
attempts to collect debt were not just a legal obligation, but they also worked as a
technique to pressure debtors in default back on track with their payments. This is
evidenced by insistent phone calls to collect the debt with false threats of foreclosure
or seizure of property, which are not required to collect the guarantee. Collectors
and bank agents also told debtors that by modifying their defaulted loan and pay-
ing again, they would be more likely to qualify for new subsidies on monthly pay-
ments, which is not true. Finally, bank and state agents misinformed about the
consequences of missing a mortgage payment. This led some debtors to believe that
if they missed a payment they would lose the subsidy for on-time payments forever,
while in fact they would only lose the subsidy for late payments.
Through these four misinformation practices, agents articulate misinforming
frames about what will happen depending on debtors’ actions or about what is at
stake in an exchange—for example, a legal charge or an abuse, one or two loans, a
problem involving the state or not, and so forth. Debtors’ adoption of these misin-
forming frames allowed the state to restrict the use of subsidies and allowed banks
to increase profits through the payment of additional charges in insurance or loan
modifications, or by securing the uncertain payment of defaulted mortgages. The
analysis that follows shows debtors’ responses, which were similar for all four forms
of misinformation.
SMOS’ UNSYSTEMATIC COUNTERINFORMATION
As the reader may expect, an important part of the debtors’ SMOs’ job was to
counter the banks’ and the state’s misinformation. Perhaps the most important way
in which SMOs counterinformed was by informing about the moratorium on fore-
closures. ANDHA-Democr atico leaders reassured debtors who received letters or
calls with threats of foreclosures that the moratorium was still active. They
explained that those letters were a formality required by the state’s guarantee on the
loan and that collectors are just trying to reactivate their debt—which, by law,
should expire after five years without payment. They also explained that the two
evictions in the neighborhood were not related to foreclosures of mortgage debtors
but only to termination of rent-to-own tenants’ contracts.8 While some members
panicked the first time they received a threatening letter, the leaders’ reassurance led
8
Some ANDHA members thought that only organized debtors were protected from foreclosures.
these members to maintain their default—that is, they trusted leaders. They became
confident that they would not be foreclosed upon soon—most were also confident
that even if foreclosures were activated, they would be safe if they continued to be
members because the SMO would protect them. Nonmembers were less confident,
but some of them also resisted debt payment after leaders informed them about the
moratorium on foreclosures, testifying to the importance of counterinformation.
SMOs’ work countering misinformation about situations other than the
moratorium was also important. For instance, when ANDHA-Democratico mem-
bers considered modifying their loans to resume paying, the national leader
warned about frauds experienced by others, such as adding an uninformed second
loan to be paid in parallel or after the mortgage. Mario (ANDHA-Democratico)
explained this as game-changing information that deterred him from modifying
his loan to resume paying, especially after hearing similar experiences from
nonmembers.
SMOs did not always spread correct information. ANDHA often reported
more progress in the negotiations with the government than was actually the case,
told members that they had to apply for the debt-relief subsidy through ANDHA,
and once said nonmembers were being foreclosed—to secure members’ loyalty. For-
mer members also complained about corrupt use of dues—not confirmed.
ANDHA-Democr atico misinformed debtors three times, but only one seemed
intentional. Leaders implied to nonmembers that the benefit of signing a constitu-
tional complaint was for those who presented it in court, but the benefit was for all
debtors. The unintentional misinformation included (1) local leaders telling mem-
bers that if they received one subsidy they could not apply for a better one in the
future and (2) saying that foreclosures were being reactivated in late 2012, after
most of my fieldwork, and mobilized debtors to stop them—apparently only a
threat by the bank, which leaders believed. It should be noted that almost all expres-
sions of distrust related to a record of misinformation came from members of one
SMO distrusting the other SMO but trusting their own SMO. Only two nonmem-
bers who tended to distrust an SMO expressed disappointment because of a previ-
ous record of misinformation.
SMOs did not systematically spread counterinformation to nonmembers.
ANDHA prohibited members from sharing information in order to use the subsi-
dies obtained through information as incentives for participation. ANDHA-
Democr atico spread information on a random basis, mostly because the rank and
file were not interested in recruiting new members, whom they saw as dropouts who
had a chance for SMO support and did not take it. About twice a year the national
leader visited each neighborhood, sometimes inviting potential new members to
meetings and informing them about the moratorium. Nonmembers sometimes also
heard this information when they ran into a local leader or a somewhat trusted
member such as a neighbor from their block. However, nonmembers received less
clear or complete information than members: nonleaders had less knowledge to
explain a situation and, when nonmembers attended meetings, leaders seldom went
out of their way to explain laws or concepts that members knew but nonmembers
were not familiar with. Nonmembers did not seem comfortable to ask about these
terms during meetings, which would have resulted in many interruptions and
912 Guzman
slowing down of the meeting. Every time a nonmember attended a meeting I inter-
viewed him the following day or later. They always either explicitly acknowledged
they had not understood much or, when prompted to explain what they under-
stood, would reveal their confusion and often incorrect understanding of what had
been discussed. In sum, while SMOs’ counterinformation was sometimes effective,
they did not do the best job at counterinforming nonmembers.
DEBTORS’ DISTRUST OF SMOS’ COUNTERINFORMATION
How did debtors come to trust the banks’ and the state’s misinformation over
SMOs’ counterinformation? In this section I show a constraint to trust in counterin-
formation and two inducements to trust misinformation that affect both members’
and nonmembers’ trust. Members were more likely to trust the SMOs’ counterinfor-
mation, because membership is partly a consequence of having some trust in leaders
and also contributes to developing that trust. However, members also distrust coun-
terinformation sometimes, because trust is dynamic, not stable. The analysis below
shows that trust in (mis- or counter)information is neither a learned disposition nor
a rational evaluation: it is largely a decision debtors make, considering their previ-
ous experiences, when confronted with difficult choices about whom to trust.
The Risks of Trusting SMOs’ Counterinformation
In January 2011, Ismael modified his loan for the third time, after his third
default in ten years. He soon missed a payment again. In May, after the second
missed payment, the bank called, threatening with seizure of his goods and eviction
if he did not pay that month. Though he was a member of ANDHA until 2009 and
thus knew about the moratorium of foreclosures before, he believed the threat. He
thought that maybe now, with a right-wing government, foreclosures or at least sei-
zures of goods were reactivated, even though he had been in default for many
months under the same administration in 2010. Thus, he borrowed money to catch
up on payments.
The day before he had planned to pay, he ran into Carolina, a neighborhood
leader of ANDHA-Democr atico. Ismael told her about his plan to pay because of
the threats. Carolina told him not to worry because the moratorium was still active,
explaining that many of his neighbors have not been foreclosed upon after years of
default. She also invited Ismael to the weekly meeting. He trusted Carolina, at least
until the next day, and decided not to pay, but he was “not untroubled,” he told
me, when I interviewed him the next day. He was still saving the money for the late
payments—with high interest—just in case, and asked me to confirm if Carolina’s
word was true. What if Carolina was wrong and he actually got evicted, he won-
dered? Believing her involved a major risk. The risk constrained Ismael from fully
trusting Carolina. On the other hand, he had borrowed money to pay because his
income had decreased. He knew that if he repaid, he would probably miss payments
again next month. Thus, he wanted to not pay, but had to make a difficult decision
about whether to trust Carolina and assume the associated risk.
The risk of trusting SMOs’ counterinformation did not necessarily lead debtors
to distrust SMOs. In fact, Ismael ended up trusting the SMO. But the risk also made
trusting difficult. Not making a terrible decision was more important than making
the most accurate one.
The Trustworthiness of Institutions
Ismael had felt disappointed by ANDHA leaders’ unfulfilled promise of a solu-

tion in 2009. While Carolina was not the leader who disappointed him, he was
reluctant to trust a leader so easily. Carolina was not one of the leaders who had
disappointed him before, but Ismael was generally distrustful of leaders. The day
after the meeting, during an interview, he asked me about the moratorium to con-
firm Carolina’s word. “But how come they call? The bank agents call you that
they’ll foreclose on your home!” he said, when I confirmed the moratorium’s cur-
rent validity. Ismael ended up not paying, thus believing me; yet he was not immedi-
ately convinced and was reluctant to believe that collectors could threaten him
while a moratorium was active.
Ismael’s question suggests that statements made in the name of institutions like
the state and banks carry a high credibility in the ears of nonmembers—a “speaker’s
authority” (Bourdieu 1991), which relies on the audience’s favorable disposition
toward institutions on specific issues. This authority gives institutional misinforma-
tion an advantage over SMOs’ counterinformation, making debtors ambivalent
about whom to believe and inducing some to trust institutions when they cannot
know who is telling the truth.
It is possible that perceived or actual misinformation by ANDHA leaders had
spawned a general distrust of SMOs on Ismael’s part. However, Ismael did not
appeal to his experience with ANDHA to express his ambivalence vis- a-vis trusting
ANDHA-Democr atico’s leader. At least at a conscious level, justifications mobi-
lized by Ismael and others to trust institutions over SMOs suggest that other factors
better explain distrust in counterinformation. Not only were they reasonably
ambivalent about trusting SMOs, but they also assumed institutional agents could
not lie—an unreasonable assumption, considering they knew the institutions’ misin-
formation record.
Nonmembers and even sometimes members or recent members still assumed
institutions would not openly lie or commit fraud, even if they suspected agents
were lazy or saving scarce subsidies and welfare resources for their relatives or
the mayor’s political clients. Antonio (new payer, whose wife participated in
ANDHA-Democr atico until 2011), expressed this clearly—after I showed him
that a new charge he did not understand was an insurance that, according to
the loan modification contract, was included in the original price of subsidized
installments:
. . . in general you see the bank as something serious and think that they’re not gonna steal or
what not. Now seeing [the charge] as you show, they’re stealing. So you go do business with
the bank and think “the bank will never steal from me,” because you trust the bank; that’s
what happened to me, I trusted the bank, and then you see the details and they take a bit from
you (the insurance increased subsidized installments in about 20%).
914 Guzman
Many nonmembers did not consider bank or state agents as necessarily helpful
or saying all the truth, but they believed that agents cannot easily make up facts.
Debtors invoked regulations against institutional fraud and the formality of institu-
tions as reasons to trust bank agents. For example, see how Irene (who had recently
abandoned ANDHA-Democr atico) explained why she trusted a bank agent who
promised that installments would not increase with unexpected insurance charges
or hidden second loans after signing a loan modification to resume paying:
AUTHOR: And do you completely believe what they say at the bank [about no additional
insurance being added later] or did you have doubts sometimes?
IRENE: I believe what the girl [bank agent] says, because I think that if they’re not trained
to give information to the people they shouldn’t talk. I mean, I think I don’t
think it [the mortgage] is a game aaaaaand—the thing about the loan modifica-
tion, I don’t think either [that it could be fraudulent], because you are signing a
document and the document is respected until the last month.
As I will show soon, institutional credibility may not have been the motive that
drove Irene to trust the agent and justify her trustworthiness. Nevertheless, the
assumption that government agents would not misinform seems to better explain
Irene’s specific argumentation.
In contrast to nonmembers, SMO members tended to take bank and state
information with a grain of salt—although given ANDHA’s clientelist ties to the
government, ANDHA members generally trusted the government until the partial
breakdown of their alliance in mid-2012. SMO members had learned that banks
and the state often misinformed them with false threats and thus assumed that they
could be trying to trick debtors into paying. They would trust the Housing Minis-
ter’s advisers’ promises sometimes, but only when they felt there was no point in
being completely distrustful. This was the case, when an adviser promised to obtain
a special subsidy for rent-to-buy debtors facing eviction. Even then, ANDHA-
Democr atico’s local leader would constantly call the adviser to pressure her, know-
ing that things could get delayed or that the adviser could change her mind and not
help obtain the subsidy.
Until early 2012, SMO members would only trust written documents, recur-
rently saying things like “I will believe it when I see the document in my hands.”
But since 2012, they became skeptical of written documents as well. They had heard
from leaders and neighbors about insurance charges added without consultation
and of debtors signing loan modifications without seeing an attached second loan
to pay penalties or interest accrued for late payments. Thus, when Angelica
(ANDHA-Democr atico) inquired about the conditions for a loan modification to
resume paying, members were suspicious and asked if the bank agent gave her any
written explanation of the terms and conditions; yet, even after hearing that the
document said all insurance charges were included from the beginning, some mem-
bers were worried about uninformed loans. As mentioned above, Mario did not
modify his loan because he feared potential undisclosed second loans attached to
loan modifications.
Given nonmembers’ tendency to doubt that state and bank agents would lie,
these debtors sought other sources to confirm counterinformation, such as trusted
neighbors or, in Ismael and Leonardo’s case, an informed “third party” like me.
With this information, and considering the risks involved, they had to decide whom
to trust.
Even members were reluctant to trust their leaders blindly and sometimes
trusted official documents more. Members sometimes questioned information dur-
ing meetings—some expressing more complete trust in leaders than others. To back
up their claims, leaders brought printouts of new decrees or the Housing and
Urbanism Ministry’s website—a strategy they discussed at the meetings of all
metropolitan leaders. Members would not always need to see documentation to
believe the information, but granted great value to documents. A quote by Ingrid
(ANDHA) illustrates the importance granted to official documentation:
No, I’m not so, like, close to Carlos (local leader); no . . . because I’ve always told him “with
documents, I believe everything; without documents—” And he’d always tell me “Ah, you
don’t believe, Mrs. Ingrid” and what not; I say, “No, I believe things seeing documents, other-
wise, that’s it.” I was always like between believing and not believing.
In sum, the evidence so far suggests two theoretical points. First, when con-
fronted with a difficult decision people do not pre-reflexively trust one source;
rather, they engage in an active decision about whom to trust. The decision is influ-
enced by the costs of trusting, that is, of acting as if one believes the information,
even when believing “with a grain of salt.” On the other hand, the decision is also
partially—at least sometimes—biased by dispositions to trust certain sources over
others. This leads to the second point: Trust or distrust are partially a disposition
adopted through a long relationship with leaders or institutions, and the institutions
carry authoritative force, especially for nonmembers, who have not repeatedly
heard about institutional misinformation. Sometimes the explanations for trust in
institutions could be post hoc justifications of decisions made for other reasons, such
as the desire to avoid the perceived costs of trusting leaders or the fear of foreclo-
sures—for example, perhaps in Irene’s quote. But some of the quotes indicate that
debtors assume institutions have credibility even when they do not have other rea-
sons to trust the institutional representatives. This is the case of Ismael, who actu-
ally decided not to trust the collector, but who was somewhat predisposed toward
trusting him. It was also the case of Edith, who gained nothing from trusting the
Social Development Ministry secretary who wrongly informed Edith that she could
not apply for a higher subsidy if she had her Social Welfare Record reevaluated. A
reevaluation could have actually made Edith eligible for the subsidy that was about
to be decreed. Yet when I suggested that could be the case, Edith contested my
claim, repeating that the secretary told her it was not, simply assuming the secretary
could not have been wrong. In other words, believing misinformation is affected by
dispositions to trust some actors, and institutions carry a high credibility in places
like Chile.
Motivated Dismissal of the Plausibility of Misinformation
When debtors realized there was a possibility that they were being misin-
formed, they quickly dismissed evidence that suggest that they might be
916 Guzman
misinformed. This could be because of previous beliefs about the bank—or what
Tversky and Kahneman (1974) would call “anchoring,” that is, giving particularly
high weight to previous beliefs when estimating risks. However, it appears more
likely to be motivated reasoning: cognitive processing that is biased to reach the
desired conclusion, seeking information that would confirm the conclusion, and
avoiding or turning a blind eye to information that would disconfirm it.
For instance, when I mentioned to Irene (payer, recent ANDHA-Democratico
member) that a popular television show recently reported bank frauds, she quickly
reacted defensively:
AUTHOR: It’s a show about things like scams—
IRENE: OK. No, but I don’t think that the bank will be scamming.
AUTHOR: —and in this show they reported—But in this show they reported the bank, it
was Scotiabank—
IRENE: But the thing is that Scotiabank—people have always talked badly about Scotia-
bank, it’s just like—like the bank of the Euro that—Euro—Latina? No, Euro—
AUTHOR: Eurolatina is another one; they were also on the show.
IRENE: That, too. But BancoEstado, we’re talking about BancoEstado, I don’t think that
there’s a scam, I don’t think that there’s—that you can say [inaudible word] a lot
of people (pause). But, y’know what? I don’t think it’s—(speeds up) I-have-faith-
in-this-one, y’know?
It is plausible that Irene’s reaction was only informed by prior knowledge of

the lawsuit against Scotiabank and other five banks for misinformation and adding
unwanted insurances (La Tercera 2011) and her ignorance of a similar case against
BancoEstado (La Tercera 2010). However, as a member of ANDHA-Democratico
until just two months before the interview, she also knew about false threats of fore-
closure by BancoEstado and misinformation practices in loan modifications. In
fact, because she knew this, before signing her loan modification to resume paying,
she had asked ANDHA-Democr atico leaders to go with her to check that the bank
did not scam her. She was upset because the leaders did not support her in the pro-
cess and talked about this in the same interview. In spite of her knowledge of misin-
formation practices, in the quote above she took a defensive attitude, first without
much clarity, and later drawing on her (supposed or new) faith in BancoEstado to
dismiss the possibility of a fraud. This suggests that she dismissed the fraud not
because she carefully evaluated arguments for and against it or was anchoring her
thoughts on previous knowledge, but because she wanted to believe no such fraud
was possible. Specifically, she appears to engage in a motivated reasoning mecha-
nism called disconfirmation bias: treating information that disconfirms a desired
conclusion—that BancoEstado would not commit fraud—more critically than
information that confirms it.
Similarly, when Lidia (nonmember) wanted to resume paying and the bank
agent asked her to sign a loan modification leaving the interest rate and number of
installments blank, she looked for arguments that would dismiss the possibility of
misinformation. The bank agent had said that next month the system would tell
what the interest will be, but that he cannot promise anything. He gave Lidia an
estimate of the number of installments she would have to pay based on the interest
rate for nonsubsidized housing loans—which until then had always been lower than
the interest rate for subsidized loans, but he did not say so. Somewhat worried, but
also glad to receive a subsidy on installments and end her four-year-long default,
Lidia signed the contract and went to the cashier to pay the loan modification fee.
As we walked back to the agent’s desk, Lidia expressed her ambivalent feelings—“I
should be jumping with joy”—but she was not. She was worried about what the
actual interest rate would be and wondered if, as I had informed her, she could have
her debt expire if she just waited one more year in default. She then used the idea
that the bank is owned by the state to convince herself that the bank would not fill
in the contract with a large interest rate:
AUTHOR: .. I mean, it’s your decision.
LIDIA: No, it’s done already. It’s done! We already did it. As long as—
AUTHOR: Now—
LIDIA: No, but being the Bank of the State (the bank’s original name), supposedly, it
shouldn’t increase the interest rate too much—(pause) It’s the state’s (seemingly
nervous laugh)!
Like all other debtors who bought the house before 2007, Lidia’s interest rate
was between 8.5% and 14% (plus inflation) and she had not qualified for the 2007
interest rate reduction to 6.5% when she asked for it. She also said the same agent
had recently told her she did not qualify for any debt relief. And yet, she tried to
believe—probably not fully convinced, as her nervous laugh suggests—that this
time the bank would not give her a high interest rate.
In sum, it seems like Irene, Lidia, and others engaged in motivated reasoning
to trust the bank. Because there are several possible motives that drive reasoning, it
is impossible here to pinpoint which ones were at play. However, the literature sug-
gests three possible motives consistent with the data: (1) Debtors wanted to believe
that a situation they desired (not being scammed) was real—they engaged in wishful
thinking (Buehler et al. 1997). Two more motives apply only when the decision to
trust the institution was made before considering the plausibility of misinformation:
(2) Debtors tried to avoid the cognitive dissonance between the thought that they
were foolish for their decision (to trust the bank) and their self-image as intelligent
persons (Kunda 1990); and (3) debtors engaged in reactance against having their
freedom of thought challenged by those suggesting that previous thoughts were
wrong (Brehm and Brehm 1981).
ACCEPTING MISINFORMATION KNOWINGLY
Why and how did debtors accept misinformation even when they knew it was
insufficient or inaccurate? There are three complementary factors at play. First,
seeking counterinformation was perceived as costly. Second, debtors came to expect
misinformation as the norm, both because of its frequency and because the bank
918 Guzman
and state “taught” debtors to expect it and not fight against it. Third, debtors down-
played the significance of misinformation and redirected blame away from institu-
tions, consequently diminishing their anger about being misinformed.
The Costs of Obtaining Counterinformation
The simplest answer to why debtors accepted the state’s or the banks’ misinfor-
mation is that they did not want to ask the SMOs because they perceived there were
costs associated with it. The most obvious cost was the requirement to participate,
if not in protests, at least in meetings. This expectation had its origins in ANDHA’s
long-standing policy of treating information as a benefit for members only,
although ANDHA-Democr atico did not share this policy. The four nonmembers
who attended one ANDHA-Democr atico meeting during my fieldwork invoked
time constraints or their unwillingness to attend protests when explaining why they
never contacted the leader or attended another meeting afterward. These debtors
ended up not seeking more information or seeking it from banks or the state rather
than from ANDHA-Democr atico, even though they had been informed about
banks’ and the state’s misinformation practices.
Additionally, there were emotional costs to contacting the SMOs. Most debt-
ors who dropped out from SMOs and resumed paying ended in bad terms with
some members, with members and dropouts expressing disappointment with each
other and talking about each other as betrayers. Recent dropouts were upset that
leaders did not support them in their decision to resume paying by not accompany-
ing them to the bank to check the loan modification contract. Dropouts still talked
to the members who were closest to them, but they were hurt with leaders and said
they did not feel like talking to leaders, even if leaders were willing to talk to them
again. Some would not even greet each other in the street. Thus, while it was not
acknowledged, it appears that dropouts’ pride prevented them from asking for help
regarding insurance charges or second loans. Similarly, given a history of conflict
between both SMOs in Las Lilas, Mariana, who had dropped out of ANDHA, did
not feel so comfortable asking ANDHA-Democr atico members for information
about an unexpected bill for a second loan. To summarize, the relationships in
which debtors were embedded made counterinformation emotionally costly.
In sum, the costs associated with seeking counterinformation are important
reason for debtors to knowingly accept misinformation as the only option. These
costs result from both the demand for participation in exchange for the SMO’s
information as a selective incentive and from the emotional relationships in which
counterinformation processes are embedded.
Normalizing Misinformation
As mentioned, financial misinformation is common in Chile. Additionally, cus-

tomer services are often unhelpful. Thus, debtors came to see misinformation and
unhelpfulness as normal. First, given the complexity of some issues, debtors did not
even try to understand them. They felt there was some misinformation in the way
things were charged, but they often thought they could not understand charges
given their limited financial and legal knowledge, so they did not even consider
bothering about them. As Cristian said, upset, “with the story that they give you
there about interest, they stick a bunch of stuff in between at the bank, the amorti-
zation and what not, I have no idea what I pay; I just pay.” The explanation non-
members often expected from agents was that the insurance charges, second loans
in their bill, or uninformed interest were “what the [computer] system indicates.”
For instance, when Lidia (nonmember defaulter) asked for a loan modification, I
saw the agent tell her that she had to sign a contract leaving the interest rate and
number of installments blank. He told her to return in two weeks to ask “if it was
processed by the system”; “the system will say what the interest rate is.” As Auyero
(2012:115–118) describes a similar situation, agents depicted loan conditions as an
inexplicable “mysterious thing.”
Second, when debtors did not expect as much misinformation as the norm,
banks and the state taught them a lesson to adjust their expectations. For instance,
in 2011 Samuel (ANDHA-Democr atico member at the time) mentioned that soon
after he bought the house—ten years before—the bank added insurances he did not
want and was told “No, you just have to do it, because it’s an obligation of the
bank.” He gave up and paid. Yet when he lost his job and tried to use the unem-
ployment insurance “they said, no, that the insurance is fine, but the job was not
too much—I don’t know, they tell you so many things, you go back and forth, you
talk to the other guy, with the one here, you talk to one there, and in the end they
all send you so many places that you get tired.” He just accepted that for years. But,
as I mentioned above, when Samuel tried not to accept misinformation in 2012,
again, he had to visit five offices to obtain information about a subsidy. He then
received a new mysterious insurance charge and never obtained an explanation.
Once again, he gave up and just paid. Maybe he evaluated the costs and benefits of
trying to obtain better information. But his broad conclusion was that he had to
accept misinformation: that’s how things are; there is not much to do about it.
Post Hoc Rationalizations
While some debtors, like Samuel or Sonia, tried to obtain information, most,
especially after being disappointed by institutions, “learned” that there was not
much information they would receive. After being misinformed, some debtors
responded with anger. Others minimized their anger by downplaying the signifi-
cance of misinformation and redirecting blame for the situation.
Samuel’s reaction illustrates how he worked to reframe the situation and, conse-
quently, minimize anger. When Samuel first found out about the added insurance
charge, he was upset and he told me “I made a huge scene at the bank.” As we talked,
he suggested going to the Housing and Urbanism Service. I suggested that we could
go to the National Service for Customers–Finance Division and he added that if they
did not respond we should go to a television program that had recently reported a
similar situation in student loans (Soto 2012). Yet when he heard, after a month, that
neither the Housing and Urbanism Service nor the National Service for Customers
920 Guzman
would help him deal with the bank’s unexplained insurance charge, he did not express
being upset. Instead, he expressed resignation, blamed himself for what led him to
those additional charges, and downplayed the significance of the abuse:
I fucked up by not paying anymore [i.e., when he defaulted almost five years ago]. Nobody
told me not to pay, I mean, I was the owner of my decision about whether or not to pay. . . . I
fucked up, I got into it [the SMO] too much. . . . Anyways, at least I didn’t spend the money
[from mortgage payments], I invested it in the business . . . but most people didn’t. . . . Imagine
how they are. (From field notes)
Similarly, when Julia (payer) had spent about a year applying for a debt-relief
subsidy and two years for a home expansion subsidy, without a response after several
visits to municipal and state offices, she reinterpreted the situation: “I’m tired of
subsidies. . . . I have bad luck with subsidies, so why am I gonna be— [wasting time
(implied)]. . . . People with more money, opportunists, have more luck . . . God will
provide.” Instead of blaming the state or the bank, from whom she originally
expected an answer, Julia blamed bad luck. And while she had thought the subsidy
and responsiveness were important when she visited several offices, when she came to
expect irresponsiveness she downplayed its importance by affirming her faith in
God’s aid.
This reframing of the situation seemed to make debtors less upset and more
accepting of the situation than other debtors, like Sonia (payer). When Sonia and I
visited a municipal agent, three of the four agents we saw were not very helpful until
I asked for more information or Sonia mentioned that I was a sociologist. When
the fourth agent left the office for a few minutes, Sonia manifested her anger: “they
just give you pain-killers . . . it feels like such powerlessness, such anger. . .. Why the
hell does the state pay a salary [to the social worker]!” (from field notes). Days later
and the following year, we talked about the options mentioned by the agents and
Sonia was still upset about the lack of help and information.
Similarly, Ismael expressed being very upset about surprise insurance charges:
“these shameless pieces of shit” (referring to the banks), “these houses are more
than paid for; they’re small; they played us (nos metieron el dedo en la boca)” (from
field notes). I asked him if he had tried to find out anything about the added insur-
ance charge, maybe through one of the debtors’ SMOs, to which he responded,
“No, I’ve been to meetings and got fed up with that shit.”
To summarize: Along the lines of Belief in a Just World theory’s predictions,
debtors sometimes actively—although perhaps unintentionally—reduced their feel-
ings of anger about misinformation. However, they did not do this by reaffirming
the fairness of the situation but by downplaying misinformation or directing blame
away from the state and banks.
CONCLUSIONS
In this article, I have discussed how people trust corporate and state misinfor-
mation in spite of the counterinformation available through a well-known SMO in
their community. Previous sociological research had led us to expect that people
believe misinformation only if counterinformation is beyond the limits of the
imaginable or is not available—although cognitive psychology predicted the oppo-

site. Furthermore, we had learned that people tend to side with counterinforming
SMOs as soon as people realize they are being misinformed by corporations or the
state. However, the case of Chilean social housing debtors shows that this is not
always true. Counterinformation is more difficult than sociologists have suggested.
I have tried to understand why this is the case by addressing two specific ques-
tions. First, why did misinformed debtors distrust the SMOs’ counterinformation? I
showed that beyond possible cognitive biases that psychologists of misinformation
have found, there were at least one constraint to debtors’ trust in SMOs’ counterin-
formation and two inducements to trust institutions like the bank and state: (1)
trusting SMOs counterinformation involved risks debtors were hesitant to take; (2)
speech in the name of an institution carried a certain credibility that SMO leaders’
speech does not have in the ears of nonmembers; and (3) debtors actively tried to
dismiss the possibility that they were being misinformed by institutions—that is,
they engaged in motivated reasoning. This reasoning was probably motivated by
debtors’ wish not to be misinformed (a form of “wishful thinking”); by efforts to
avoid the “cognitive dissonance” between their high self-image and the thought that
they had acted foolishly by trusting the institution; or as “reactance” against being
told what to think. Together, these findings suggest that, while previous dispositions
and beliefs affect trust, debtors have a more active role in deciding beliefs than
social movement theories previously suggested.
Second, I asked why debtors accepted misinformation even when they knew
they were being deceived. I found three factors that explain this puzzle: (1) there
were costs to counterinformation, notably, SMOs’ demands for participation, loss
of pride in asking for help after abandoning an SMO, and possible loss of benefits
threatened by the state; (2) debtors expected misinformation given its frequency and
the banks’ and the state’s lessons that there is nothing to do against misinformation;
(3) debtors directed blame for misinformation away from institutions and down-
played its significance, consequently diminishing their anger about misinformation.
Taken together, these findings suggest that, while there are external inducements to
accepting misinformation peacefully, debtors also play an active role in doing so.
Of course, my findings are not free of limitations, which further research could
address. First, the case studied may not have allowed identifying some factors
affecting trust. For instance, it is likely that people are better disposed to trust SMO
countering state misinformation in countries where corruption is more pervasive.
Social capital may also affect trust in counterinformation. Membership in certain
groups, such as churches, may increase or decrease social trust—although my lim-
ited data on non-SMO memberships did not suggest any pattern. Future research
could better identify and explore the role of such macro- and meso-level factors.
Second, further questions arise about how SMOs can gain trust if individuals are
socialized to trust authority. Third, some interpretations are admittedly inconclu-
sive and require further examination.
Beyond those limitations, these findings have significant implications. First,
they contribute to our knowledge of how misinformation works and produces
acquiescence. Contrary to what previous scholarship had implied, having an SMO
spread potentially believable counterinformation systematically is not necessarily
922 Guzman
effective, given the constraints that are beyond the SMO’s control. Neither will
revealing misinformation necessarily turn people against misinforming institutions.
Further studies of counterinformation campaigns should consider these constraints
and how SMOs can address negative emotions associated with trusting SMOs.
Given that counterinforming is a form of counterframing, my findings have
important implications for our understanding of counterframing processes. Current
work on social-movement framing grants all agency to the framing actors and
depicts the frame targets as passive agents with whom frames may resonate or not.
My findings suggest that framing targets have a more active role in frame adoption
and that the adoption depends not only on cognitive factors but also on behavioral
commitments and risks associated to the acceptance of certain frames. Active moti-
vated reasoning probably explains frame processing, even beyond cases of counter-
information. Social movement scholars would benefit from paying more attention
to framing targets’ agency: the ways in which targets actively engage with frames
and counterframes, the rationales motivating their choices of frames, and the moti-
vated rationalizations that help sustain frame alignment. Besides leaders’ framing
processes, we should look at the targets’ frame processing.
Beyond sociology, the findings have important implications for the cognitive
psychology of misinformation. I have suggested three hypotheses about factors
affecting the trust in misinformation rather than counterinformation that we would
probably not have were it not for the ethnographic study of anomalous cases: (H1)
risks associated with trusting counterinformation constraint trust; (H2) the author-
ity of institutions tends to grant credibility to misinformation; and (H3) a strong
wish for an outcome and the desire to reaffirm previous decisions strengthen the
belief in misinformation and make subsequent corrections less effective. Experimen-
tal studies could test these hypotheses or the conditions under which they apply.
My findings also offer important insights into the study of acquiescence: Con-
sonant with some sociologists’ and psychologists’ suggestions, individuals play an
active role in validating their own oppression (e.g., Burawoy 1979; Jost and Hun-
yady 2005). I have argued that two mechanisms diminishing anger about unfairness
are downplaying its significance and directing blame away from dominant actors,
sometimes toward oneself. Future research should test if these mechanisms con-
tribute to acquiescence in other contexts, beyond cases of misinformation.
To summarize: I have bridged the sociology and cognitive psychology of misin-
formation to explain why people distrust counterinformation and accept misinfor-
mation, sometimes knowingly and peacefully. I hope this moves the debate about
responses to counterinformation so that we consider (1) how actors incorporate
practical consequences in their decisions about whom to believe and whether to
accept misinformation; and (2) the active role they have in convincing themselves
about the validity and significance of misinformation.
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Guzman - Should I Trust The Bank or The Social Movement

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Sociological Forum, Vol. 30, No.

“Should I Trust the Bank or the Social Movement?” Motivated

In Chile, a large share of social (low-income) housing is sold by private devel-

Unfortunately, most of this psychological research focuses on situations in

monthly payments, Samuel inquired at the government’s Housing and Urbanism

SMOS’ UNSYSTEMATIC COUNTERINFORMATION

leaders, are replaced by pseudonyms to protect their anonymity. I interviewed debt-

imaginable or is not available—although cognitive psychology predicted the oppo-

THE BANKS’ AND THE STATE’S MISINFORMATION PRACTICES

monthly payments, Samuel inquired at the government’s Housing and Urbanism

SMOS’ UNSYSTEMATIC COUNTERINFORMATION

DEBTORS’ DISTRUST OF SMOS’ COUNTERINFORMATION

The Risks of Trusting SMOs’ Counterinformation

The Trustworthiness of Institutions

Ismael had felt disappointed by ANDHA leaders’ unfulﬁlled promise of a solu-

Motivated Dismissal of the Plausibility of Misinformation

AUTHOR: Eurolatina is another one; they were also on the show.

It is plausible that Irene’s reaction was only informed by prior knowledge of

ACCEPTING MISINFORMATION KNOWINGLY

The Costs of Obtaining Counterinformation

As mentioned, ﬁnancial misinformation is common in Chile. Additionally, cus-

Post Hoc Rationalizations

imaginable or is not available—although cognitive psychology predicted the oppo-

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