Abstract

http://ssrn.com/abstract=2368941
 


 



Promises and Expectations


Florian Ederer


Yale School of Management; Yale University - Cowles Foundation

Alexander Stremitzer


UCLA School of Law

September 4, 2014

Cowles Foundation Discussion Paper No. 1931

Abstract:     
We investigate why people keep their promises in the absence of external enforcement mechanisms and reputational effects. In a controlled laboratory experiment we show that exogenous variation of second-order expectations (promisors' expectations about promisees' expectations that the promise will be kept) leads to a significant change in promisor behavior. We provide clean evidence that a promisor's aversion to disappoint a promisee's expectation leads her to keep her promise. We propose a simple theory of lexicographic promise keeping that is supported by our results and nests the findings of previous contributions as special cases.

Number of Pages in PDF File: 33

Keywords: Promises, Expectations, Beliefs, Contracts

JEL Classification: A13, C91, D03, C72, D64, K12

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Date posted: December 18, 2013 ; Last revised: September 5, 2014

Suggested Citation

Ederer, Florian and Stremitzer, Alexander, Promises and Expectations (September 4, 2014). Cowles Foundation Discussion Paper No. 1931. Available at SSRN: http://ssrn.com/abstract=2368941 or http://dx.doi.org/10.2139/ssrn.2368941

Contact Information

Florian Ederer (Contact Author)
Yale School of Management ( email )
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
HOME PAGE: http://faculty.som.yale.edu/florianederer/

Yale University - Cowles Foundation ( email )
Box 208281
New Haven, CT 06520-8281
United States

Alexander Stremitzer
UCLA School of Law ( email )
405 Hilgard Avenue
Box 90095-1476
Los Angeles, CA 90095-1476
United States
HOME PAGE: http://www.law.ucla.edu/faculty/all-faculty-profiles/professors/Pages/Alexander-Stremitzer.aspx
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