Promises and Opportunity CostsChristoph Vanberg (Heidelberg University)

7 January 2021

We welcome Christoph Vanberg (Heidelberg University) who will present his project

Promises and Opportunity Costs

Abstract: This paper experimentally investigates the hypothesis that promise-keeping behavior is affected by the opportunities that a counterpart foregoes by relying on the promise. We present two motivational mechanisms that could drive such an effect. One is that people dislike causing harm through a broken promise, and that they measure such harm by comparing what the counterpart will receive as compared to what she would have received if no promise had been made in the first place. The other is that people may dislike causing regret in another person. We test these ideas in the context of an experimental trust game. The main treatment variable is the payoff that the first mover forgoes if he "trusts". Consistent with our main hypothesis, we find that an increase in this foregone payoff increases promise-keeping behavior. The experiment is designed to rule out alternative explanations for such an effect, including reciprocity concerns and belief-based guilt aversion. Our evidence suggests that the mechanism driving the effect may involve an aversion to causing regret in others.

Place: Zoom (please contact leonie.gerhards@uni-hamburg.de to get the login information)
Time: 17:15 - 18:45
We invite everyone interested to attend!