Fishy Gifts: Bribing with Shame and Guilt

The following is a model of psychological contracting with unmonitorable performance, implicit o¤ers, 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 …rm 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 and asymmetric information. I show that the ‘shame’of accepting a possible bribe can screen for reciprocation inducing ‘guilt’. An announcement can extend the e¤ect. Current policies to deter reciprocation might aid such screening. This model of conditional guilt also helps reconciles apparently con‡icting experimental …ndings on guilt aversion. JEL Codes: C72, D82, D86, H51, H75, I11, I18, M31, M37 Keywords: psychological contracting, bribery, guilt, shame, gifts, drug …rms, doctors, social norms, indirect speech, trust game, credence goods