Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2023-09-20
Number: 23-058/I
Author-Name: Sorravich Kingsuwankul
Author-Workplace-Name: Vrije Universiteit Amsterdam
Author-Name: Chloe Tergiman
Author-Workplace-Name: Pennsylvania State University
Author-Name: Marie Claire Villeval
Author-Workplace-Name: Univ Lyon
Title: Why do oaths work? Image concerns and credibility in promise keeping
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.
Classification-JEL: C91, D01, D83, D91
Keywords: Promise-keeping, Honesty Oaths, Common Knowledge, Deniability, Financial Markets, Laboratory 
ExperimentFile-URL: https://papers.tinbergen.nl/23058.pdf
File-Format: application/pdf
File-Size: 881.555 bytes
Handle: RePEc:tin:wpaper:20230058