Honesty and Informal Agreements

Martin Dufwenberg, Maroš Servátka and Radovan Vadovic ()

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

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: agreement; bargaining; behavioral economics; deal; experiment; honesty; lost wallet game; negotiation; temptation (search for similar items in EconPapers)
JEL-codes: C70 C91 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-02-15
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 (1)

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https://repec.canterbury.ac.nz/cbt/econwp/1504.pdf (application/pdf)

Related works:
Journal Article: Honesty and informal agreements (2017)
Working Paper: Honesty and Informal Agreements (2016)
Working Paper: Honesty and Informal Agreements (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:15/04

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