Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73528
Authors: 
Beck, Adrian
Kerschbamer, Rudolf
Qiu, Jianying
Sutter, Matthias
Year of Publication: 
2010
Series/Report no.: 
Working Papers in Economics and Statistics 2010-06
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

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