Fishy Gifts: Bribing with Shame and Guilt
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.
|Date of creation:||May 2008|
|Date of revision:||29 Aug 2009|
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