Promises & Partnership (2003)
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| Citations: | 15 - 2 self |
BibTeX
@MISC{Charness03promises&,
author = {Gary Charness and Martin Dufwenberg and Guillaume Frechette and Dan Friedman and Drew Fudenberg and Simon Gächter and Brit Grosskopf and David Laibson and Dan Levin and David I. Levine and Tanya Menon and Torsten Persson and Yuval Rottenstreich and David Strömberg and Richard Thaler},
title = {Promises & Partnership},
year = {2003}
}
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Abstract
We examine, experimentally and theoretically, how communication within a partnership may mitigate the problem (highlighted in contract theory) of hidden action. What is the form and content of the communication? Which model of decision-making can capture the impact of communication? We consider free-form communication, measure beliefs (about actions and beliefs), and examine which motivational forces influence subjects. We find they harbor belief-dependent preferences that can be captured using psychological game theory. In particular, agents are influenced by guilt aversion, which suggests a theory of why and how communication influences behavior in which statements of intent and resulting expectations play a special role. This has bearing on how to understand partnerships and contracts.
