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Author Info

  • Martin Dufwenberg
  • Maroš Servátka

    ()
    (University of Canterbury)

  • Radovan Vadovič

Abstract

We develop, and experimentally test, a behavioral model of deal- making which includes binding contracts and informal agreements as distinct but related special cases. The key assumptions: people are mostly honest; they suffer costs of overcoming temptation to renege; and they tend to split gains down the middle.

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File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1214.pdf
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Bibliographic Info

Paper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 12/14.

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Length: 44 pages
Date of creation: 26 Aug 2012
Date of revision:
Handle: RePEc:cbt:econwp:12/14

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References

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  1. Ozdenoren, Emre & Salant, Stephen & Silverman, Dan, 2010. "Willpower and the Optimal Control of Visceral Urges," Discussion Papers dp-10-35, Resources For the Future.
  2. Feltovich, Nick & Swierzbinski, Joe, 2011. "The role of strategic uncertainty in games: An experimental study of cheap talk and contracts in the Nash demand game," European Economic Review, Elsevier, vol. 55(4), pages 554-574, May.
  3. Alexander L. Brown & Zhikang Eric Chua & Colin F. Camerer, 2009. "Learning and Visceral Temptation in Dynamic Saving Experiments-super-," The Quarterly Journal of Economics, MIT Press, vol. 124(1), pages 197-231, February.
  4. Ben-Ner, Avner & Putterman, Louis, 2009. "Trust, communication and contracts: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 106-121, May.
  5. Tore Ellingsen & Magnus Johannesson, 2004. "Promises, Threats and Fairness," Economic Journal, Royal Economic Society, vol. 114(495), pages 397-420, 04.
  6. Christoph Vanberg, 2008. "Why Do People Keep Their Promises? An Experimental Test of Two Explanations -super-1," Econometrica, Econometric Society, vol. 76(6), pages 1467-1480, November.
  7. James C. Cox & Maroš Servátka & Radovan Vadovic, 2009. "Saliency of Outside Options in the Lost Wallet Game," Working Papers in Economics 09/03, University of Canterbury, Department of Economics and Finance.
  8. Peter Martinsson & Kristian Ove R. Myrseth & Conny Wollbrant, 2012. "Reconciling pro-social vs. selfish behavior: On the role of self-control," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 7(3), pages 304-315, May.
  9. Maroš Servátka & Radovan Vadovič, 2009. "Unequal outside options in the lost wallet game," Economics Bulletin, AccessEcon, vol. 29(4), pages 2870-2883.
  10. Servátka, Maroš & Tucker, Steven & Vadovič, Radovan, 2011. "Words speak louder than money," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 700-709.
  11. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, January.
  12. Topi Miettinen, 2008. "Contracts and Promises - An Approach to Pre-play Agreements," Jena Economic Research Papers 2008-088, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  13. Charness, Gary & Haruvy, Ernan & Sonsino, Doron, 2007. "Social distance and reciprocity: An Internet experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 88-103, May.
  14. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
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Cited by:
  1. Miettinen, Topi, 2013. "Promises and conventions – An approach to pre-play agreements," Games and Economic Behavior, Elsevier, vol. 80(C), pages 68-84.

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