On the nature of guilt aversion: Insights from a new methodology in the dictator game

Abstract

The theory of guilt aversion has been shown to influence human behavior in many contexts. It suggests that an agent’s actions are influenced by his perception of other agents’ expectations, thus linking behavior to second order beliefs. We use a novel methodology to construct a proxy for second order beliefs through information revelation in an experimental dictator game, in which we inform dictators about the transfers received by each of their partners in the past. This methodology has certain advantages: in particular, it does not suffer from a false consensus effect and does not require withholding information from subjects. Our findings show that the effect of guilt aversion on giving depends on communication. In the baseline treatment, our proxy for beliefs cannot predict transfers. However, behavior is consistent with guilt aversion when communication between dictators and recipients takes place. Hence, our results highlight the sensitivity of guilt aversion to context.