Our model formalizes the psychological construct of guilt as a deviation from a perceived expectation of behavior and in turn posits that trust and cooperation may depend on

avoidance of a predicted negative affective state. Congruent with our model’s predictions, we Saracatinib cost observed evidence suggesting that when participants chose whether or not to honor an investment partner’s trust distinct neural systems are involved in the assessment of anticipated guilt and in maximizing individual financial gain, respectively. These results provide converging psychological, economic, and neural evidence that a guilt-aversion mechanism underlies decisions to cooperate and demonstrate the utility of an interdisciplinary approach in assessing the motivations behind high-level decision-making. Our experimental paradigm adds to the standard TG methodology by also eliciting MG-132 concentration participants’ (second-order) beliefs, allowing us to test the predictions of the guilt-aversion model. In addition, we did not employ deception, and all participant interactions were financially consequential, which

importantly allows us to examine real interactions and also account for naturally occurring individual differences in both trust and reciprocity. Consistent with previous work (Charness and Dufwenberg, 2006 and Dufwenberg and Gneezy, 2000), our results indicate that participants do indeed engage in mentalizing and are in fact able to accurately assess their partners’ expectations. Further, as proposed by the model, participants use these expectations in their decisions and frequently choose to return the amount of money that they believe their partner expected them to return. Based on the postexperimental ratings that assess counterfactual guilt, we can infer that the motivation to match expectations is guilt aversion. Indeed, participants report that they would have felt more guilt had they returned less money in the game. The guilt-aversion model explored here is distinct to other models of social preference as it posits

that participants can mentalize about their partner’s expectations and that they then use this information to why avoid disappointing the partner. In contrast, other models conjecture that people are (1) motivated by a “warm glow” feeling and find cooperation inherently rewarding (Andreoni, 1990 and Fehr and Camerer, 2007), (2) motivated to minimize the discrepancy between self and others’ payoffs (Bolton and Ockenfels, 2000 and Fehr and Schmidt, 1999), or (3) motivated to reciprocate good intentions and punish bad intentions (Dufwenberg and Kirchsteiger, 2004 and Rabin, 1993). The guilt-aversion model thus provides a different psychological account of cooperation than other models because it incorporates both social reasoning and social emotional processing.