An analysis of the use of guilt and shame by private investors as internal controls

Background: Several studies have shown that psychological factors significantly impact people's economic decisions. Investors' sensitivity to psychological emotions, especially guilt and shame, can be utilized as a control tool in contract enforcement, an important challenge for private investors. Although these psychological factors are important, more research needs to be conducted on how private investors use them. Aims: This research aims to investigate the use of psychological factors, including guilt and shame, as an internal control in the enforcement of contracts by investors in the private sector. Methods: The measurement tool used in this study was a researchers-made questionnaire. A total of 300 investors in Fars province participated in the study. The data were analyzed using the latent class analysis method, including Vuong-Lo-Mendell-Rubin Likelihood Ratio, Lo-Mendell-Rubin Adjusted LRT, and Parametric Bootstrapped Likelihood Ratio Tests. Results: The result demonstrated that two classes can be identified in the sample (p