Ashamed to be Selfish

Joint with: Philipp Sadowski

We study a two-stage choice problem. In the first stage, the decision maker (DM) chooses a set of payoff-allocations between herself and a passive recipient. In the second stage, DM chooses an allocation from the set. The recipient is only aware of the second stage choice. Choosing selfishly in the second stage, in the face of a fairer available alternative, may inflict shame on DM. We axiomatize a representation of DM's preferences over sets that identifies DM's selfish ranking, her norm of fairness and shame. It has been suggested that altruism is a prominent motive for non-selfish choice. We identify a condition under which shame to be selfish can mimic altruism, when the experimenter only records the second stage choice. An additional condition implies that the norm of fairness can be characterized as the Nash solution of a bargaining game induced by the second-stage choice problem. The representation is applied to a simple strategic situation, a game of trust.

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