Exploiting the Guilt Aversion of Others - Do Agents Do It and Is It Effective?

Guilt averse agents are motivated to meet the expectations of others, even at the expense of their own material payoff. Several experimental studies have found results consistent with agents exhibiting guilt averse motivations in games. 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, Stillwell, and Heatherton (1994). This game enables me to experimentally test whether agents attempt to exploit the guilt aversion of others, and whether it is actually effective at influencing the behavior of others. 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. Furthermore, I appeal to the Battigalli and Dufwenberg (2007) model of simple guilt and show that effective guilt induction can be supported as an equilibrium of the psychological game considered