On the costs of kindness: An experimental investigation of guilty minds and negative reciprocity

Psychology has inspired economics to recognize intentions in addition to outcomes as being relevant for utility and behavior. Reciprocal behavior, in particular, has been related to the kindness of chosen actions and how kindness can be derived from the benefits obtained in unchosen alternatives. This study shows that a richer understanding of kindness is required. We carry out ultimatum games with a reduced space of strategies and observe that subjects refrain from negative reciprocity (rejecting proposals) if an unchosen alternative was costly to the proposer. Second, we find proposers to anticipate this behavior. Not only the benefits are relevant for assessments of kindness, the costs of kindness matter as well.