Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/146126
Authors: 
Balafoutas, Loukas
Fornwagner, Helena
Year of Publication: 
2016
Series/Report no.: 
Working Papers in Economics and Statistics 2016-09
Abstract: 
According to the theory of guilt aversion, agents suffer a psychological cost whenever they fall short of other people's expectations. In this paper we suggest that there may be limits to this kind of motivation. We present evidence from an experimental 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.
Subjects: 
guilt aversion
experiment
strategy method
greed
JEL: 
C91
D03
Document Type: 
Working Paper

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