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Sorting with shame in the laboratory

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  • Ong, David

Abstract

Trust is indispensable to fiduciary fields (e.g., credit rating), where experts exercise wide discretion on others behalf. Can the shame from scandal sort trustworthy people out of a fiduciary field? I tested for the possibility in a charitable contribution game where subjects could be "ungenerous" when unobserved. After establishing that "generosity" required a contribution of more than $6, subjects were given the choice of contributing either $5 publicly or $0-$10 privately. Almost all control subjects chose to contribute privately less than $2. The majority of treatment subjects, after being told the prediction that they were unlikely to contribute more than $2, if they contributed privately, contributed $5 publicly. This suggests that the mere belief that a subject would exploit the greater discretion and unobservability of a fiduciary-like position can deter entry into such a position. Thus, scandals that create such a belief could repel shame-sensitive people from that field -- possibly to the detriment of the field and the economy as a whole. The shame externality of a scandals on private judgments may also been seen in politically correct speech after demonstrated racial prejudice of others.

Suggested Citation

  • Ong, David, 2008. "Sorting with shame in the laboratory," MPRA Paper 16523, University Library of Munich, Germany, revised 27 Jul 2009.
  • Handle: RePEc:pra:mprapa:16523
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    shame; psychological game theory; beliefs preferences; charitable contributions game; fiduciary;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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