IDEAS home Printed from https://ideas.repec.org/a/spr/jbecon/v87y2017i9d10.1007_s11573-017-0862-8.html
   My bibliography  Save this article

Voluntary agreements between competitors: trick or truth?

Author

Listed:
  • Johanna Jauernig

    (Technical University of Munich)

  • Matthias Uhl

    (Technical University of Munich)

  • Christoph Luetge

    (Technical University of Munich)

Abstract

Voluntary agreements in which competitors commit to common goals are important tools for corporate social responsibility. After entering into a commitment, however, competitors often have incentives to behave opportunistically. This is possible because voluntary agreements are not enforced by external sanctions. We present the results of an exploratory laboratory experiment that investigates the behavior of competitors engaging in commitments and consequently the effectiveness of such measures. We find that introducing a publicly visible commitment device that is implemented with a low probability mitigated conflict between competitors substantially. Our results show that subjects’ inclination to defect one another after competition was mainly driven by the opponents’ refusal to enter into a commitment. In our experiment, a commitment was not used to trick the competitor into a false sense of security but rather to convey the truth about subjects’ moral behavior. We conclude that the efforts of (non-)governmental institutions to reinforce trust between competitors may be of substantial value.

Suggested Citation

  • Johanna Jauernig & Matthias Uhl & Christoph Luetge, 2017. "Voluntary agreements between competitors: trick or truth?," Journal of Business Economics, Springer, vol. 87(9), pages 1173-1191, December.
  • Handle: RePEc:spr:jbecon:v:87:y:2017:i:9:d:10.1007_s11573-017-0862-8
    DOI: 10.1007/s11573-017-0862-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11573-017-0862-8
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    File URL: https://libkey.io/10.1007/s11573-017-0862-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kathleen Segerson, 2013. "When Is Reliance on Voluntary Approaches in Agriculture Likely to Be Effective?," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(4), pages 565-592.
    2. Christoph Vanberg, 2008. "Why Do People Keep Their Promises? An Experimental Test of Two Explanations -super-1," Econometrica, Econometric Society, vol. 76(6), pages 1467-1480, November.
    3. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    4. Alexander Dahlsrud, 2008. "How corporate social responsibility is defined: an analysis of 37 definitions," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 15(1), pages 1-13, January.
    5. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
    6. Jauernig, Johanna & Uhl, Matthias & Luetge, Christoph, 2016. "Competition-induced punishment of winners and losers: Who is the target?," Journal of Economic Psychology, Elsevier, vol. 57(C), pages 13-25.
    7. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
    8. Lange Ian, 2009. "Evaluating Voluntary Measures with Treatment Spillovers: The Case of Coal Combustion Products Partnership," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-22, September.
    9. Shanti Gamper-Rabindran & Stephen Finger, 2013. "Does industry self-regulation reduce pollution? Responsible Care in the chemical industry," Journal of Regulatory Economics, Springer, vol. 43(1), pages 1-30, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. von Grundherr, Michael & Jauernig, Johanna & Uhl, Matthias, 2021. "To condemn is not to punish: An experiment on hypocrisy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(2), pages 1-13.
    2. Michael von Grundherr & Johanna Jauernig & Matthias Uhl, 2021. "To Condemn Is Not to Punish: An Experiment on Hypocrisy," Games, MDPI, vol. 12(2), pages 1-13, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicolas Jacquemet & Stéphane Luchini & Jason F. Shogren & Adam Zylbersztejn, 2018. "Coordination with communication under oath," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 627-649, September.
    2. Koukoumelis, Anastasios & Levati, M. Vittoria & Weisser, Johannes, 2012. "Leading by words: A voluntary contribution experiment with one-way communication," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 379-390.
    3. Daniel Matisoff, 2015. "Sources of specification errors in the assessment of voluntary environmental programs: understanding program impacts," Policy Sciences, Springer;Society of Policy Sciences, vol. 48(1), pages 109-126, March.
    4. Gehrig, Thomas & Güth, Werner & Leví0nský, René & Popova, Vera, 2010. "On the evolution of professional consulting," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 113-126, October.
    5. Khalmetski, Kiryl & Ockenfels, Axel & Werner, Peter, 2015. "Surprising gifts: Theory and laboratory evidence," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 163-208.
    6. Jacquemet Nicolas & Zylbersztejn Adam, 2013. "Learning, Words and Actions: Experimental Evidence on Coordination-Improving Information," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 215-247, July.
    7. Dannenberg,Astrid & Martinsson,Peter, 2015. "The effect of nonbinding agreements on cooperation among forest user groups in Nepal and Ethiopia," Policy Research Working Paper Series 7325, The World Bank.
    8. Jauernig, Johanna & Uhl, Matthias, 2019. "Spite and preemptive retaliation after tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 158(C), pages 328-336.
    9. Andersson, Ola & Wengström, Erik, 2012. "Credible communication and cooperation: Experimental evidence from multi-stage Games," Journal of Economic Behavior & Organization, Elsevier, vol. 81(1), pages 207-219.
    10. Ben Greiner & Werner Güth & Ro’i Zultan, 2012. "Social communication and discrimination: a video experiment," Experimental Economics, Springer;Economic Science Association, vol. 15(3), pages 398-417, September.
    11. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    12. Miettinen, Topi, 2013. "Promises and conventions – An approach to pre-play agreements," Games and Economic Behavior, Elsevier, vol. 80(C), pages 68-84.
    13. Dufwenberg, Martin & Servátka, Maroš & Vadovič, Radovan, 2017. "Honesty and informal agreements," Games and Economic Behavior, Elsevier, vol. 102(C), pages 269-285.
    14. Uyanga Turmunkh & Martijn J. van den Assem & Dennie van Dolder, 2019. "Malleable Lies: Communication and Cooperation in a High Stakes TV Game Show," Management Science, INFORMS, vol. 65(10), pages 4795-4812, October.
    15. Jeroen Ven & Marie Claire Villeval, 2015. "Dishonesty under scrutiny," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 1(1), pages 86-99, July.
    16. Jordi Brandts & David J. Cooper & Roberto A. Weber, 2015. "Legitimacy, Communication, and Leadership in the Turnaround Game," Management Science, INFORMS, vol. 61(11), pages 2627-2645, November.
    17. Rosaz, Julie & Villeval, Marie Claire, 2012. "Lies and biased evaluation: A real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 537-549.
    18. Tobias Regner & Gerhard Riener, 2011. "Motivational Cherry Picking," Jena Economics Research Papers 2011-029, Friedrich-Schiller-University Jena.
    19. He, Simin & Offerman, Theo & van de Ven, Jeroen, 2019. "The power and limits of sequential communication in coordination games," Journal of Economic Theory, Elsevier, vol. 181(C), pages 238-273.
    20. Grolleau, Gilles & Kocher, Martin G. & Sutan, Angela, 2014. "Cheating and loss aversion: do people lie more to avoid a loss?," Discussion Papers in Economics 21387, University of Munich, Department of Economics.

    More about this item

    Keywords

    Competition; Money burning; Voluntary agreements; Commitment; Collective action;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jbecon:v:87:y:2017:i:9:d:10.1007_s11573-017-0862-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.