Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 683: Testing Guilt Aversion

Tore Ellingsen (), Magnus Johannesson (), Sigve Tjøtta () and Gaute Torsvik ()
Additional contact information
Tore Ellingsen: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Magnus Johannesson: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Sigve Tjøtta: Department of Economics, University of Bergen, Postal: University of Bergen, Hermann Fossgate 6, 5007 Bergen, Norway
Gaute Torsvik: Department of Economics, University of Bergen, Postal: University of Bergen, Hermann Fossgate 6, 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 7, 2007

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