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The limits of guilt

Loukas Balafoutas () and Helena Fornwagner ()

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: Guilt aversion has been put forward in recent years as a prominent motivation for certain aspects of human behavior. When agents are guilt averse, their utility depends on what they believe others expect of them and they suffer a cost whenever they fall short of those expectations. In this paper we suggest that there may be limits to this kind of motivation. We present evidence from a dictator game showing that dictators display behavior consistent with guilt aversion for relatively low levels of recipient expectations, roughly up to the point where the recipient expects half of the available surplus. Beyond that point the relationship between expectations and transfers becomes negative. We argue that this non-monotonicity can help explain why the economic literature on guilt aversion offers conflicting findings on the relationship between expectations and behavior. Moreover, we examine this relationship at the individual level and establish a typology of subjects depending on how and whether they condition their behavior on recipient expectations. Our evidence is consistent with a simple theoretical model of guilt aversion.

Keywords: guilt aversion; greed; experiment; strategy method (search for similar items in EconPapers)
JEL-codes: C91 D03 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-hpe and nep-upt
Date: 2016-04
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2016-09

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