CFDP Update Date
We investigate why people keep their promises in the absence of external enforcement mechanisms and reputational eﬀects. In a controlled laboratory experiment we show that exogenous variation of second-order expectations (promisors’ expectations about promisees’ expectations that the promise will be kept) leads to a signiﬁcant change in promisor behavior. We provide clean evidence that a promisor’s aversion to disappointing a promisee’s expectation leads her to keep her promise. We propose a simple theory of lexicographic promise keeping that is supported by our results and nests the ﬁndings of previous contributions as special cases.
Ederer, Florian and Stremitzer, Alexander, "Promises and Expectations" (2013). Cowles Foundation Discussion Papers. 2328.