Promises and Expectations

Florian Ederer

Yale University - School of Management; Yale University - Cowles Foundation

Alexander Stremitzer

UCLA School of Law

March 14, 2016

Cowles Foundation Discussion Paper No. 1931

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 disappointing 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: 34

Keywords: Promises, Expectations, Beliefs, Contracts

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

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Date posted: December 18, 2013 ; Last revised: March 16, 2016

Suggested Citation

Ederer, Florian and Stremitzer, Alexander, Promises and Expectations (March 14, 2016). Cowles Foundation Discussion Paper No. 1931. Available at SSRN: https://ssrn.com/abstract=2368941 or http://dx.doi.org/10.2139/ssrn.2368941

Contact Information

Florian Ederer (Contact Author)
Yale University - School of Management ( email )
165 Whitney Avenue
New Haven, CT 06511
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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