Sorting with shame in the laboratory

Ong, David (2008): Sorting with shame in the laboratory. Unpublished.

Abstract

Trust is indispensable to fiduciary fields (e.g., credit rating), where experts exercise wide discretion on behalf of others. Can the shame from a scandal sort trustworthy people out of a fiduciary field? I tested for the possibility that a shame externality can sort in a charitable contribution game where subjects could be "ungenerous" when unobserved. After establishing that "generosity" required a contribution of more than $6, subjects were given the choice of contributing either $5 publicly or $0-$10 privately. 20/22 control subjects chose to contribute privately less than $2. 10/26 treatment subjects, after being told the prediction that they were unlikely to contribute more than $2, if they contributed privately, contributed $5 publicly. (This group also showed higher shame sensitivity.) This suggests that the mere belief that a subject would exploit the greater discretion and unobservability of a fiduciary-like position can deter entry into such a position. Thus, scandals that create such a belief could repel shame-sensitive people from that field -- possibly to the detriment of the field and the economy as a whole.

• Item Type: MPRA Paper
• Language: English
• Keywords: shame, psychological game theory, beliefs preferences, charitable contributions game, fiduciary
• Subjects: H - Public Economics > H4 - Publicly Provided Goods > H42 - Publicly Provided Private Goods; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games

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