Abstract

The general idea of guilt aversion is that agents may be motivated to avoid letting others down, even at the expense of their own material payoff. Several experimental studies have documented behavior that is consistent with agents exhibiting guilt averse motivations in social interactions. However, there are strategic implications of guilt aversion, which can impact economic outcomes in important ways, that have yet to be explored. I introduce a game that admits the possibility for agents to induce guilt upon others in a manner consistent with the method posited by Baumeister et al.. This game enables me to experimentally test whether agents attempt to exploit the guilt aversion of others by inducing guilt upon them, and whether agents are actually susceptible to this exploitation. Additionally, the design enables me to test whether agents exhibit higher degrees of trust when they are given such an opportunity to exploit the guilt aversion of others. The data suggest that agents do not attempt to fully exploit the guilt aversion of other agents by inducing guilt upon them; however, the data suggest that agents would have been susceptible to guilt induction.