Why do oaths work? Image concerns and credibility in promise keeping

Sorravich Kingsuwankul, Chloe Tergiman () and Marie Claire Villeval
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Chloe Tergiman: Pennsylvania State University, Smeal College of Business, 334 Business Building, University Park, PA 16802, United States

No 2316, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We use a laboratory experiment to understand the channels through which honesty oaths can affect behavior and credibility. Using a game with asymmetric information in a financial market setting that captures some important features of advisor-investor interactions, we manipulate the common knowledge of the promise and investigate three non-pecuniary costs of breaking an oath: co-player image costs, audience-image costs, and self-image costs. For investors oaths are neither sufficient nor necessary to generate trust: ultimately investors rely on their experience. We link laboratory results to a survey we conducted in the Netherlands where oaths are required in the banking sector.

Keywords: Promise-keeping; Honesty Oaths; Common Knowledge; Deniability; Financial Markets; Laboratory Experiment (search for similar items in EconPapers)
JEL-codes: C91 D01 D83 D91 G41 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Why do oaths work? Image concerns and credibility in promise keeping (2023)
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