Embezzlement and Guilt Aversion
Posted: 11 May 2018 Last revised: 3 Jan 2019
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Embezzlement and Guilt Aversion
Embezzlement and Guilt Aversion
Date Written: April 26, 2018
Abstract
Donors usually need intermediaries to transfer their donations to recipients. A risk is that donations can be embezzled before they reach the recipients. Using psychological game theory, we design a novel three-player Embezzlement Mini-Game to study whether intermediaries suffer from guilt aversion and whether guilt aversion toward the recipient is stronger than toward the donor. Testing the predictions of the model in a laboratory experiment, we show that the proportion of guilt-averse intermediaries is the same irrespective of the direction of the guilt. However, structural estimates indicate that the effect of guilt on behaviour is higher when the guilt is directed toward the recipient.
Keywords: Embezzlement, Dishonesty, Guilt Aversion, Psychological Game Theory, Experiment
JEL Classification: C91
Suggested Citation: Suggested Citation