Honesty and Informal Agreements

Martin Dufwenberg, Maroš Servátka and Radovan Vadovič

MPRA Paper from University Library of Munich, Germany

Abstract: We develop, and experimentally test, models of informal agreements. Agents are assumed to be honest but suffer costs of overcoming temptations. We extend two classical bargaining solutions -- split-the-difference and deal-me-out -- to this informal agreement setting. For each solution there are two natural ways to do this, leaving us with 2x2 models to explore. In the experiment, a temptations-constrained version of deal-me-out emerges as the clear winner.

Keywords: agreement; bargaining; behavioral economics; contract; deal; experiment; honesty; lost wallet game; negotiation; temptation (search for similar items in EconPapers)
JEL-codes: C7 C91 (search for similar items in EconPapers)
Date: 2016-08-30
New Economics Papers: this item is included in nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Honesty and informal agreements (2017)
Working Paper: Honesty and Informal Agreements (2015)
Working Paper: Honesty and Informal Agreements (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:73442

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