Fishy Gifts: Bribing with Shame and Guilt

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Fishy Gifts: Bribing with Shame and Guilt

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Ong, David

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David Ong

Abstract

The following is a model of psychological contracting with unmonitorable performance, implicit offers, and screening for non-performance by the announcement of the expectation of performance. It is motivated by the $250 billion prescription drug industry, which spends $19 billion per year on marketing to US doctors, mostly on `gifts', and often, as at Yale, with no monitoring for reciprocation. In one revealing incident, a drug firm representative closed her presentation to Yale medical residents by handing out $150 medical reference books and remarking, "one hand washes the other." By the next day, half the books were returned. I model this with a one shot psychological trust game with negative belief preferences and asymmetric information. I show that the `shame' of accepting a possible bribe can screen for reciprocation inducing `guilt'. An announcement can extend the effect. Current policies to deter reciprocation might aid such screening. I also discuss applications like vote buying when voting is unobservable and why taxis drivers in Naples announce inflated fares after their service is sunk.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17019.

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Date of creation: May 2008
Date of revision: 29 Aug 2009
Handle: RePEc:pra:mprapa:17019

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Find related papers by JEL classification:
I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Health, Education, and Welfare
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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