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Guilt from Promise-Breaking and Trust in Markets for Expert Services - Theory and Experiment

  • Adrian Beck

    ()

  • Rudolf Kerschbamer

    ()

  • Jianying Qiu

    ()

  • Matthias Sutter

    ()

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.

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Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2010-06.

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Length: 55
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:inn:wpaper:2010-06
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  18. Huck, Steffen & Ruchala, Gabriele K. & Tyran, Jean-Robert, 2006. "Competition Fosters Trust," CEPR Discussion Papers 6009, C.E.P.R. Discussion Papers.
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