| By: |
Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique);
Stéphane Luchini;
Jason Shogren;
Adam Zylbersztejn |
| Abstract: |
Under incomplete contracts, the mutual belief in reciprocity facilitates how
traders create value through economic exchange. Creating such beliefs among
strangers can be challenging even when they are allowed to communicate,
because communication is cheap. In this paper, we first extend the literature
showing that a truth-telling oath increases honesty to a sequential trust game
with pre-play, fixed-form, and cheap-talk communication. Our results confirm
that the oath creates more trust and cooperative behavior thanks to an
improvement in communication; but we also show that the oath induces selection
into communication -it makes people more wary of using communication,
precisely because communication speaks louder under oath. We next designed
additional treatments featuring mild and deterrent fines for deception to
measure the monetary equivalent of the non-monetary incentives implemented by
a truth-telling oath. We find that the oath is behaviorally equivalent to mild
fines. The deterrent fine induces the highest level of cooperation.
Altogether, these results confirm that allowing for interactions under oath
within a trust game with communication creates significantly more economic
value than the identical exchange institutions without the oath. |
| Keywords: |
Trust game, cooperation, communication, commitment, deception, fine, oath |
| Date: |
2024 |
| URL: |
https://d.repec.org/n?u=RePEc:hal:pseptp:halshs-04722343 |