Honesty and informal agreements

Martin Dufwenberg, Maroš Servátka, Radovan Vadovič*

*Corresponding author for this work

Research output: Contribution to journalArticle

7 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)269-285
Number of pages17
JournalGames and Economic Behavior
Volume102
DOIs
Publication statusPublished - 1 Mar 2017

Keywords

  • Agreements
  • Communication
  • Experiment
  • Game theory
  • Negotiations
  • Temptation

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