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Promises & Partnership Author info | Abstract | Publisher info | Download info | Related research | Statistics Charness, Gary () (University of California at Santa Barbara)
Dufwenberg, Martin () (Dept. of Economics, Stockholm University)
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We examine, experimentally and theoretically, how communication within a partnership may mitigate the problem (highlighted in contract theory) of hidden action. What is the form and content of the communication? Which model of decision-making can capture the impact of communication? We consider free-form communication, measure beliefs (about actions and beliefs), and examine which motivational forces influence subjects. We find they harbor belief-dependent preferences that can be captured using psychological game theory. In particular, agents are influenced by guilt aversion, which suggests a theory of why and how communication influences behavior in which statements of intent and resulting expectations play a special role. This has bearing on how to understand partnerships and contracts.
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Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number
2003:3.
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Length: 46 pages
Date of creation: 13 Feb 2003Date of revision:
Handle: RePEc:hhs:sunrpe:2003_0003Contact details of provider: Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden Phone: +46 8 16 20 00 Fax: +46 8 16 14 25 Email: Web page: http://www.ne.su.se/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Sten Nyberg).
Keywords: Promises ; partnership ; contract theory ; behavioral economics ; hidden action ; moral hazard ; lies ; social preferences ; psychological game theory ; guilt aversion ; reciprocity ; fairness ; Other versions of this item:
Find related papers by JEL classification: A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement D64 - Microeconomics - - Welfare Economics - - - Altruism J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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