Sorting with shame in the laboratory

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

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

References

2.12 : Battigalli, P, Dufwenberg, M, "Guilt in Games," American Economic Review, Volume (Year): 97, 2007

2.11 : Battigalli, P, Dufwenberg, M, "Dynamic Psychological Games," Journal of Economic Theory, Elsevier, vol. 144(1), pages 1-35, January

2.29 : Berger, RL, "More Powerful Tests from Confidence Interval P-Value", The American Statician, Vol 50, No. 4, P. 314-318, Nov. 1996

2.27 : Berger, RL, "Exact Unconditional Homogeneity/Independence Tests for 2X2 Tables", http://www.stat.ncsu.edu/exact/

2.2 : Benedict, R, The Chrysanthemum and the Sword. Boston: Houghton Mifflin, 1946

2.13 : Charness, G, Dufwenberg, M, "Promises and Partnership," Econometrica, Econometric Society, Volume: 74, Pages: 1579-1601, Issue: 6 November, 2006

2.7 : Dufwenberg, M, Gneezy, U, "Measuring Beliefs in an Experimental Lost Wallet Game," Games and Economic Behavior 30, 163--182, 2000

2.26 : Eichenwald, K, "Investigation Finds No Evidence of Slur On Texaco Tapes", The New York Times, November 11, 1996

2.1 : Gehm, TL, Scherer, KR, "Relating situation evaluation to emotion differentiation: Nonmetric analysis of cross-cultural questionnaire data," in K. R. Scherer (Ed.), Facets of emotion: Recent research (pp. 61-77) Hillsdale, NJ: Lawrence Earlbaum, 1988

2.30 : Greenland, S, "On the Logical Justification of Conditional Tests for Two-by-Two Contingency Tables," The American Statistician, Vol. 45, 1991

2.6 : Hurely, TM, Shogren, JF, "An Experimental Comparison of Induced and Elicited Beliefs" The Journal of Risk and Uncertainty, 30:2; 169--188, 2005

2.16 : Krishnamoorthy, K., Handbook of Statistical Distributions with Applications, Chapman & Hall/CRC Press, 2006

2.4 : Lewis, HB,Shame and Guilt in Neurosis. New York: International Universities Press, 1971

2.25 : Loury, Glenn, "The Racism We Condemn", New York Times, November 24, 1996

2.20 : MacDonald, E., "The Credit Rating Agencies' Moment of Shame", Fox Business, October 23, 2008. http://emac.blogs.foxbusiness.com/2008/10/23/the-credit-rating-agencies-moment-of-shame/

2.5 : Nyarko,Y and Schotter,A, "An Experimental Study of Belief Learning Using Elicited Beliefs," Econometrica 70, 971--1005, 2002

2.8 : Ong, D, "Fishy Gifts: Bribing with Shame and Guilt," Mimeo, 2008

2.18 : Ong, D, "Pro-Bono Work and Trust in Fiduciary Professions," Mimeo, 2008 (available upon request)

2.15 : Piece, A, Fundamentals of Non-parametric Statistics, Dickenson Publishing Company, Belmont, California, 1970

2.14 : Preacher, KJ, & Briggs, NE, Calculation for Fisher's Exact Test: An interactive calculation tool for Fisher's exact probability test for 2 x 2 tables [Computer software]. Available from http://www.quantpsy.org, 2001

2.22 : Ritholtz, B, "S&P: We Knew Nothing! Nothing!" The Big Picture,Wednesday, October 22, 2008 http://bigpicture.typepad.com/comments/2008/10/sp-its-not-our.html

2.28 : Schlag, K, "Exact Hypothesis Testing without Assumptions - New and Old Results not only for Experimental Game Theory", July 5, 2008

2.24 : Segal, D, "Wall St., a Financial Epithet, Stirs Outrage," New York Times, February 2, 2009

2.17 : Sidney, S. Castallan, J., Nonparametric Statistics for The Behavioral Sciences, McGraw-Hill Humanities; 2 edition, January 1, 1988

2.21 : Sorkin, AR, "Rating Agencies Draw Fire on Capitol Hill DealBook," New York Times, October 22, 2008

2.23 : Stolberg, SG, Labaton, S, "Obama Calls Wall Street Bonuses `Shameful'," New York Times, January 29, 2009

2.9 : Tadelis, S, "The Power of Shame and the Rationality of Trust", Working Paper, UC Berkeley, Haas School of Business, August 10, 2007

2.3 : Tangney, JP, Dearing, RL, Shame and Guilt, The Guilford Press, 2002

2.10 : Tracey, JL, Richard, RW, Tangney, JP, Campos, JJ, The Self-conscious Emotions, Guilford Press, 2007