Download this Paper Open PDF in Browser

The Power of Shame and the Rationality of Trust

30 Pages Posted: 10 Aug 2007  

Steven Tadelis

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: August 10, 2007

Abstract

Experimental evidence and a host of recent theoretical ideas take aim at the common economic assumption that individuals are selfish. The arguments made suggest that intrinsic social preferences of one kind or another are at the heart of unselfish, pro-social behavior that is often observed. I suggest an alternative motive based on shame that is imposed by the extrinsic beliefs of others, which is distinct from the more common approaches to social preferences such as altruism, a taste for fairness, reciprocity, or self-identity perception. The motives from shame are consistent with observed behavior in previously studied experiments, but more importantly, they imply new testable predictions. A new set of experiments confirm both that shame is a motivator, and that trusting players are strategically rational in that they anticipate the power of shame. Some implications for policy and strategy are discussed.

Keywords: shame, pro-social behavior, reputation, game theory

JEL Classification: C72, C91, D82

Suggested Citation

Tadelis, Steven, The Power of Shame and the Rationality of Trust (August 10, 2007). Available at SSRN: https://ssrn.com/abstract=1006169 or http://dx.doi.org/10.2139/ssrn.1006169

Steven Tadelis (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Paper statistics

Downloads
381
Rank
63,583
Abstract Views
1,661