Logo
Munich Personal RePEc Archive

Promises and Endogenous Reneging Costs

Heller, Yuval and Sturrock, David (2017): Promises and Endogenous Reneging Costs.

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_78803.pdf]
Preview
PDF
MPRA_paper_78803.pdf

Download (807kB) | Preview

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.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.