Heller, Yuval and Sturrock, David (2017): Promises and Endogenous Reneging Costs.
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Abstract
We present a novel theoretical mechanism that explains the capacity for non-enforceable communication about future actions to improve efficiency. We explore a two-player partnership game where, before choosing a level of effort to exert on a joint project, each player makes a cheap talk promise to their partner about their own future effort. We allow agents to incur a psychological cost of reneging on their promises. We demonstrate a strong tendency for evolutionary processes to select agents who incur intermediate costs of reneging, and show that these intermediate costs induce second-best optimal outcomes.
Item Type: | MPRA Paper |
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Original Title: | Promises and Endogenous Reneging Costs |
Language: | English |
Keywords: | Promises, lying costs, joint projects, input games, partnerships. |
Subjects: | C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles |
Item ID: | 78803 |
Depositing User: | Yuval Heller |
Date Deposited: | 01 May 2017 01:40 |
Last Modified: | 01 Oct 2019 07:00 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/78803 |
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