agent feels bad when not reaching a target effort set in the contract. While the presence of guilt brings the outcome closer … target, inducing guilt which must be compensated by a higher financial reward. Thus, although the principal's payoff is …

We consider guilt averse agents and principals and study the effects of guilt on optimal behavior of the principal and … guilt when failing to provide the target effort, the principal when paying less than the contract requires or when setting … an unreasonably high target effort. In equilibrium, a guilt-prone agent chooses a higher effort than an agent who only …

We consider guilt averse agents and principals and study the effects of guilt on optimal behavior of the principal and … suffers from guilt when failing to provide the target effort, the principal when paying less than the contract requires or … when setting an unreasonably high target effort. In equilibrium, a guilt-prone agent chooses a higher effort than an agent …

We consider guilt averse agents and principals and study the effects ofguilt on optimal behavior of the principal and … guilt when failing to provide the target effort,the principal when paying less than the contract requires or when settingan … unreasonably high target effort.In equilibrium, a guilt-prone agent chooses a higher effort than anagent who only cares about …