Discussion Paper Details

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Title: Sharing Guilt: How Better Access to Information May Backfire

Author(s): Roman Inderst

Publication Date: May 2019

Keyword(s): Advice, Guilt aversion, responsibility diffusion, shared guilt and Trust

Programme Area(s): Industrial Organization

Abstract: We study strategic communication between a customer and an advisor who is privately informed about the best suitable choice for the customer, but whose preferences are misaligned with the customer's preferences. The advisor sends a message to the customer who, in turn, can secure herself from bad advice by acquiring costly information on her own. We find that making the customer's information acquisition less costly, e.g., through consumer protection regulation or digital information aggregation and dissemination, leads to less prosocial behavior of the advisor. This can be explained by a model of shared guilt, which predicts a shift in causal attribution of guilt from the advisor to the customer if the latter could have avoided her ex post disappointment.

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Bibliographic Reference

Inderst, R. 2019. 'Sharing Guilt: How Better Access to Information May Backfire'. London, Centre for Economic Policy Research.