Shaping beliefs in experimental markets for expert services: Guilt aversion and the impact of promises and money-burning options

Adrian Beck, Rudolf Kerschbamer, Jianying Qiu and Matthias Sutter

Games and Economic Behavior, 2013, vol. 81, issue C, 145-164

Abstract: In a credence goods game with an expert and a consumer, we study experimentally the impact of two devices that are predicted to induce consumer-friendly behavior if the expert has a propensity to feel guilty when he believes that he violates the consumerʼs payoff expectations: (i) an opportunity for the expert to make a non-binding promise; and (ii) an opportunity for the consumer to burn money. In belief-based guilt aversion theory the first opportunity shapes an expertʼs behavior if an appropriate promise is made and if it is expected to be believed by the consumer; by contrast, the second opportunity might change behavior even though this option is never used along the predicted path. Experimental results confirm the behavioral relevance of (i) but fail to confirm (ii).

Keywords: Credence goods; Belief-dependent preferences; Guilt aversion; Promises; Money burning; Psychological forward induction; Experiments (search for similar items in EconPapers)
JEL-codes: C72 C91 D03 D82 D84 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:81:y:2013:i:c:p:145-164

DOI: 10.1016/j.geb.2013.05.002

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