On the transmission of guilt aversion and the evolution of trust

This paper studies the evolution of trust and trustworthiness by modeling the intergenerational transmission of guilt aversion. The results depend both on features of strategic interaction and on parental transmission. We show that if there is complete information of opponents' traits, independent of parenting style, the share of high-guilt agents in society weakly increases over time, and trust and trustworthiness are maximized. Moreover, when traits are not observable, different levels of guilt always coexist, and trust and trustworthiness might also increase when parents have imperfect empathy in the transmission of traits or if there is homophily in society.