Guilt and fairness

Guilt aversion and inequity aversion are two pivotal concepts in understanding human behavior in situations involving trust dynamics. Inequity aversion explains trustworthiness through a preference for fairness, as trustworthiness leads to more equitable distributions. Conversely, guilt aversion posits that people act to avoid the guilt associated with betraying others. As both preferences provide justifications for trustworthiness, distinguishing between them solely through observed behavior poses a significant challenge. In this work, I aim to disentangle the effects of guilt and inequity aversion to identify the main driver of pro-social behavior in a theory-driven experiment based on the Trust Game. I show theoretically that by increasing the stakes for the trustor, the two preferences have opposite predictions on trustworthiness. The experimental design, informed by this theory, features a doubling of the trustor’s payoffs. The results indicate that preferences for equality are the main determinants of trustworthiness. This further shows that inequality erodes trustworthiness and, consequently, trust.