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

  • Beck, Adrian

    ()

    (University of Innsbruck)

  • Kerschbamer, Rudolf

    ()

    (University of Innsbruck)

  • Qiu, Jianying

    ()

    (University of Innsbruck)

  • Sutter, Matthias

    ()

    (University of Cologne)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4827.

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Length: 50 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:iza:izadps:dp4827
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