Fishy Gifts: Bribing with Shame and Guilt

Ong, David (2008): Fishy Gifts: Bribing with Shame and Guilt.

Abstract

The following is a model of psychological contracting with unmonitorable performance, implicit offers, 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 firm 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 effect. 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 inflated fares after their service is sunk.

• Item Type: MPRA Paper
• Language: English
• Keywords: bribery, guilt, shame, gifts, drug firms, doctors, social norms, indirect speech, psychological trust game, contracting
• Subjects: I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M31 - Marketing; H - Public Economics > H5 - National Government Expenditures and Related Policies > H51 - Government Expenditures and Health; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H75 - State and Local Government: Health ; Education ; Welfare ; Public Pensions; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M3 - Marketing and Advertising > M37 - Advertising; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games

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