Guilt from Promise-Breaking and Trust in Markets for Expert Services: Theory and Experiment
50 Pages Posted: 22 Mar 2010
We examine the influence of guilt and trust on the performance of credence goods markets. An expert can make a promise to a consumer first, whereupon the consumer can express her trust by paying an interaction price before the expert's provision and charging decisions. We argue that the expert's promise induces a commitment that triggers guilt if the promise is broken, and guilt is exacerbated by higher interaction prices. An experiment qualitatively confirms our predictions: (1) most experts make the predicted promise; (2) proper promises induce consumer-friendly behavior; and (3) higher interaction prices increase the commitment value of proper promises.
Keywords: promises, guilt, trust, credence goods, experts, reciprocity
JEL Classification: C72, C91, D82
Suggested Citation: Suggested Citation