The limits of guilt

Abstract

According to the theory of guilt aversion, agents suffer a psychological cost whenever they fall short of other people’s expectations. In this paper, we suggest that there may be limits to this kind of motivation. We present evidence from an experimental dictator game showing that behavior is consistent with guilt aversion for relatively low levels of recipient expectations, roughly up to the point where the recipient expects half of the available surplus. Beyond that point the relationship between expectations and transfers becomes negative. Moreover, we examine this relationship at the individual level and establish a typology of subjects depending on how and whether they condition their behavior on recipient expectations.