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Promises and Conventions - An Approach to Pre-play Agreements

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  • Topi Miettinen

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Abstract

Experiments suggest that communication increases the contribution to public goods (Ledyard, 1995). There is also evidence that, when contemplating a lie, people trade off their private benefit from the lie with the harm it inflicts on others (Gneezy, 2005). We develop a model of bilateral pre-play agreements that assumes the latter and implies the former. A preference for not lying provides a partial commitment device that enables informal agreements. We establish some general properties of the set of possible agreements in normal form games and characterize the smallest and largest such set. In symmetric games, pre-play agreements crucially depend on whether actions are strategic complements or substitutes. With strategic substitutes, commitment power tends to decrease in efficiency whereas the opposite may be true with strategic complements.

Suggested Citation

  • Topi Miettinen, 2006. "Promises and Conventions - An Approach to Pre-play Agreements," Papers on Strategic Interaction 2006-29, Max Planck Institute of Economics, Strategic Interaction Group.
  • Handle: RePEc:esi:discus:2006-29
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    Cited by:

    1. Wengström, Erik, 2007. "Setting the Anchor: Price Competition, Level-n Theory and Communication," Working Papers 2007:6, Lund University, Department of Economics.
    2. Chlaß, Nadine & Riener, Gerhard, 2015. "Lying, Spying, Sabotaging -- Balancing Means and Aims --," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113222, Verein für Socialpolitik / German Economic Association.
    3. Nathan Berg & Donald Lien, 2009. "Sexual orientation and self-reported lying," Review of Economics of the Household, Springer, vol. 7(1), pages 83-104, March.
    4. Boly Amadou & Gillanders Robert & Miettinen Topi, 2017. "Working Paper 277 - Deterrence and Legitimacy in Anti-Corruption Policymaking," Working Paper Series 2394, African Development Bank.
    5. Chlaß, Nadine & Riener, Gerhard, 2015. "Lying, spying, sabotaging : procedures and consequences," Working Papers 15-18, University of Mannheim, Department of Economics.
    6. Topi Miettinen, 2011. "Moral Hazard and Clear Conscience," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(2), pages 224-235, June.
    7. Allen Hicken & Stephen G. Leider & Nico Ravanilla & Dean Yang, 2014. "Temptation in Vote-Selling: Evidence from a Field Experiment in the Philippines," CESifo Working Paper Series 4828, CESifo Group Munich.
    8. Amadou Boly & Robert Gillanders & Topi Miettinen, 2016. "Deterrence, peer effect, and legitimacy in anti-corruption policy-making: An experimental analysis," WIDER Working Paper Series 137, World Institute for Development Economic Research (UNU-WIDER).
    9. Topi Miettinen & Sigrid Suetens, 2008. "Communication and Guilt in a Prisoner's Dilemma," Journal of Conflict Resolution, Peace Science Society (International), vol. 52(6), pages 945-960, December.
    10. Nadine Chlass & Peter G. Moffatt, 2017. "Giving in dictator games: Experimenter demand effect or preference over the rules of the game?," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 17-05, School of Economics, University of East Anglia, Norwich, UK..
    11. Feltovich, Nick & Giovannoni, Francesco, 2015. "Selection vs. accountability: An experimental investigation of campaign promises in a moral-hazard environment," Journal of Public Economics, Elsevier, vol. 126(C), pages 39-51.
    12. Dufwenberg, Martin & Servátka, Maroš & Vadovič, Radovan, 2017. "Honesty and informal agreements," Games and Economic Behavior, Elsevier, vol. 102(C), pages 269-285.
    13. Gregory DeAngelo & Bryan McCannon, 2016. "Honest Abe or Doc Holliday? Bluffing in Bargaining," Working Papers 16-14, Department of Economics, West Virginia University.
    14. Stefano Demichelis & Jorgen W. Weibull, 2008. "Language, Meaning, and Games: A Model of Communication, Coordination, and Evolution," American Economic Review, American Economic Association, vol. 98(4), pages 1292-1311, September.
    15. Nicolas Jacquemet & Stephane Luchini & Jason Shogren & Adam Zylbersztejn, 2011. "Coordination with Communication under Oath," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00635801, HAL.
    16. Demichelis, Stefano & Weibull, Jörgen, 2006. "Efficiency, communication and honesty," SSE/EFI Working Paper Series in Economics and Finance 645, Stockholm School of Economics, revised 28 Nov 2006.
    17. Jensen, Martin Kaae & Kozlovskaya, Maria, 2016. "A representation theorem for guilt aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 148-161.
    18. repec:eee:joepsy:v:62:y:2017:i:c:p:295-312 is not listed on IDEAS
    19. Anbarcı, Nejat & Feltovich, Nick & Gürdal, Mehmet Y., 2015. "Lying about the price? Ultimatum bargaining with messages and imperfectly observed offers," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 346-360.
    20. Dannenberg,Astrid & Martinsson,Peter, 2015. "The effect of nonbinding agreements on cooperation among forest user groups in Nepal and Ethiopia," Policy Research Working Paper Series 7325, The World Bank.

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    Keywords

    pre-play negotiations; communication; social norms; agreements; guilt;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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