Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 14/07: Testing Guilt Aversion

Tore Ellingsen (), Magnus Johannesson (), Sigve Tjøtta () and Gaute Torsvik ()
Additional contact information
Tore Ellingsen: Department of Economics, Stockholm School of Economics,, Postal: Box 6501, SE-113 83 Stockholm, Sweden.
Magnus Johannesson: Department of Economics, Stockholm School of Economics,, Postal: Box 6501, SE-113 83 Stockholm, Sweden.
Sigve Tjøtta: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway
Gaute Torsvik: University of Bergen, Department of Economics, Postal: Hermann Fossgt. 6, N-5007 Bergen, Norway

Abstract: Guilt averse individuals experience a utility loss if they believe they let someone down. In particular, generosity depends on what the donor believes that the recipient expects to receive. In experimental work, several authors have identified a positive correlation between such second-order donor beliefs and generous behavior, as predicted by the guilt aversion hypothesis. However, the correlation could alternatively be due to a “false consensus effect,” i.e., the tendency of people to believe others to think like themselves. In order to test the guilt aversion hypothesis more rigorously, we conduct three separate experiments: a dictator game experiment, a complete information trust game experiment, and a hidden action trust game experiment. In the experiments we inform donors about the beliefs of their respective recipients, while eliciting these beliefs so as to maximize recipient honesty. The correlation between generous behavior and donors’ second-order beliefs is close to zero in all three experiments.

Keywords: guilt aversion; beliefs; generosity; experiments.

JEL-codes: C91; D64

38 pages, December 15, 2007

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