Promises and Partnership

32 Pages Posted: 9 Apr 2003

See all articles by Gary Charness

Gary Charness

University of California, Santa Barbara (UCSB) - Department of Economics

Martin Dufwenberg

University of Arizona - Department of Economics

Date Written: May 19, 2006

Abstract

We examine experimentally the impact of communication on trust and cooperation. Our design admits observation of promises, lies, and beliefs. The evidence is consistent with people striving to live up to others' expectations in order to avoid guilt, as can be modeled using psychological game theory. When players exhibit such guilt aversion, communication may influence motivation and behavior by influencing beliefs about beliefs. Promises may enhance trustworthy behavior, which is what we observe. We argue that guilt aversion may be relevant for understanding strategic interaction in variety of settings, and that it may shed light on the role of language, discussions, agreements, and social norms in these contexts.

Keywords: Promises, partnership, contract theory, behavioral economics, hidden action, moral hazard, lies, social preferences, psychological game theory, guilt aversion, reciprocity, fairness

JEL Classification: A13, B49, C72, C91, D63, D64, J41

Suggested Citation

Charness, Gary and Dufwenberg, Martin, Promises and Partnership (May 19, 2006). Available at SSRN: https://ssrn.com/abstract=380083 or http://dx.doi.org/10.2139/ssrn.380083

Gary Charness (Contact Author)

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States
805-893-2412 (Phone)
805-893-8830 (Fax)

Martin Dufwenberg

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

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