Fishy Gifts: Bribing with Shame and Guilt

Abstract

The following is a model of psychological contracting with unmonitorable performance, implicit o¤ers, and screening for non-performance by the announcement of the expectation of performance. It is motivated by the $250 billion prescription drug industry, which spends $19 billion per year on marketing to US doctors, mostly on 'gifts', and often, as at Yale, with no monitoring for reciprocation. In one revealing incident, a drug …rm representative closed her presentation to Yale medical residents by handing out $150 medical reference books and remarking, "one hand washes the other." By the next day, half the books were returned. I model this with a one shot psychological trust game with negative belief preferences and asymmetric information. I show that the 'shame'of accepting a possible bribe can screen for reciprocation inducing 'guilt'. An announcement can extend the e¤ect. Current policies to deter reciprocation might aid such screening. I also discuss applications like vote buying when voting is unobservable and why taxis drivers in Naples announce in ‡ated fares after their service is sunk.JEL Codes: C72, D82, D86, H51, H75, I11, I18, M31, M37

Sorting with shame in the laboratory

“…Thus, scandals which create such beliefs could change a …duciary …eld by repelling shame-sensitive people -possibly to the detriment of the …eld and the economy as a whole, if shame sensitivity is positively correlated with trustworthiness. This result that shame can sort people out of situations in which they might exploit moral hazard is consistent with the predictions of the pooling and separating equilibria of [Ong, 2008a] 2 . To my knowledge, there are no other papers on belief or 'shame externalities'.…”

“…This announcement of the expectation of low contribution levels was designed to induce shame -conditional on the private option being taken. It played the same role as the drug …rm representative's remark "One hand was the other" in "Fishy Gifts" [Ong, 2008a], where reciprocation was shameful.…”

Moral Emotions and Partnership

“…We find strong evidence for the effect of proneness to guilt (in the outcome as well as the action condition), but we do not find evidence of an effect of proneness to shame in the action condition. What does this mean for economic models of shame, like, for instance, Tadelis (2007) or Ong (2011), that rely on the private/public distinction between guilt and shame motives? Insights from social psychology indicate that also the behaviour/self domain matters (as, for instance, considered in Battigalli and Dufwenberg, 2007;López-Pérez, 2010).…”

“…Similar to the guilt aversion framework shame models in economics (see Tadelis, 2007;López-Pérez, 2010;or Ong, 2011) rely on such an ability to anticipate shame to predict kind behaviour. 6 3 Experiment…”

“…Economic models of shame (see Tadelis, 2007;Battigalli and Dufwenberg, 2009;Ong, 2011) also consider the ex post information structure, but they focus on the self. B dislikes to be thought of as a bad person.…”