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Why do oaths work? Image concerns and credibility in promise keeping

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  • Sorravich Kingsuwankul

    (School of Business and Economics, Vrije Universiteit Amsterdam, De Boelelaan 1105, 1081 HV Amsterdam, The Netherlands. Tinbergen Institute, 1082 MS Amsterdam, The Netherlands)

  • Chloe Tergiman

    (Pennsylvania State University, Smeal College of Business, 334 Business Building, University Park, PA 16802, United States)

  • Marie Claire Villeval

    (Univ Lyon, CNRS, GATE UMR 5824. 93, Chemin des Mouilles, F-69130 Ecully, France. IZA, Bonn, Germany)

Abstract

We use a laboratory experiment to understand the channels through which honesty oaths can affect behavior and credibility. Using a game with asymmetric information in a financial market setting that captures some important features of advisor-investor interactions, we manipulate the common knowledge of the promise and investigate three non-pecuniary costs of breaking an oath: co-player image costs, audience-image costs, and self-image costs. For investors oaths are neither sufficient nor necessary to generate trust: ultimately investors rely on their experience. We link laboratory results to a survey we conducted in the Netherlands where oaths are required in the banking sector.

Suggested Citation

  • Sorravich Kingsuwankul & Chloe Tergiman & Marie Claire Villeval, 2023. "Why do oaths work? Image concerns and credibility in promise keeping," Working Papers 2316, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
  • Handle: RePEc:gat:wpaper:2316
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    More about this item

    Keywords

    Promise-keeping; Honesty Oaths; Common Knowledge; Deniability; Financial Markets; Laboratory Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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