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Title:Guilt from promise-breaking and trust in markets for expert services: Theory and experiment PDF Logo
Authors:Beck, Adrian
Kerschbamer, Rudolf
Qiu, Jianying
Sutter, Matthias
Issue Date:2010
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4827
Abstract:We examine the influence of guilt and trust on the performance of credence goods markets. An expert can make a promise to a consumer first, whereupon the consumer can express her trust by paying an interaction price before the expert's provision and charging decisions. We argue that the expert's promise induces a commitment that triggers guilt if the promise is broken, and guilt is exacerbated by higher interaction prices. An experiment qualitatively confirms our predictions: (1) most experts make the predicted promise; (2) proper promises induce consumer-friendly behavior; and (3) higher interaction prices increase the commitment value of proper promises.
Subjects:Promises
guilt
trust
credence goods
experts
reciprocity
JEL:C72
C91
D82
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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