Commitment to the truth creates trust in market exchange: Experimental evidence

Nicolas Jacquemet (), Stéphane Luchini (), Jason Shogren and Adam Zylbersztejn

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

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 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-evo, nep-exp and nep-law
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04722343v1
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Published in Games and Economic Behavior, 2024, 148, pp.279-295. ⟨10.1016/j.geb.2024.09.011⟩

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Related works:
Journal Article: Commitment to the truth creates trust in market exchange: Experimental evidence (2024)
Working Paper: Commitment to the truth creates trust in market exchange: Experimental evidence (2024)
Working Paper: Commitment to the truth creates trust in market exchange: Experimental evidence (2024)
Working Paper: Commitment to the truth creates trust in market exchange: Experimental evidence (2023)
Working Paper: Commitment to the truth creates trust in market exchange: Experimental evidence (2023)
Working Paper: Commitment to the truth creates trust in market exchange: Experimental evidence (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-04722343

DOI: 10.1016/j.geb.2024.09.011

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