Honesty and informal agreements

Martin Dufwenberg, Maroš Servátka and Radovan Vadovič

Games and Economic Behavior, 2017, vol. 102, issue C, 269-285

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 2×2 models to explore. In the experiment, a temptations-constrained version of deal-me-out emerges as the clear winner.

Keywords: Agreements; Negotiations; Communication; Temptation; Experiment; Game theory (search for similar items in EconPapers)
JEL-codes: C72 C78 C92 D03 D86 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Working Paper: Honesty and Informal Agreements (2016)
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:eee:gamebe:v:102:y:2017:i:c:p:269-285

DOI: 10.1016/j.geb.2016.12.008

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