IDEAS home Printed from https://ideas.repec.org/p/hal/journl/halshs-04722343.html
   My bibliography  Save this paper

Commitment to the truth creates trust in market exchange: Experimental evidence

Author

Listed:
  • Nicolas Jacquemet

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Stéphane Luchini
  • Jason Shogren
  • Adam Zylbersztejn

Abstract

Under incomplete contracts, the mutual belief in reciprocity facilitates how traders create value through economic exchange. Creating such beliefs among strangers can be challenging even when they are allowed to communicate, because communication is cheap. In this paper, we first extend the literature showing that a truth-telling oath increases honesty to a sequential trust game with pre-play, fixed-form, and cheap-talk communication. Our results confirm that the oath creates more trust and cooperative behavior thanks to an improvement in communication; but we also show that the oath induces selection into communication -it makes people more wary of using communication, precisely because communication speaks louder under oath. We next designed additional treatments featuring mild and deterrent fines for deception to measure the monetary equivalent of the non-monetary incentives implemented by a truth-telling oath. We find that the oath is behaviorally equivalent to mild fines. The deterrent fine induces the highest level of cooperation. Altogether, these results confirm that allowing for interactions under oath within a trust game with communication creates significantly more economic value than the identical exchange institutions without the oath.

Suggested Citation

  • Nicolas Jacquemet & Stéphane Luchini & Jason Shogren & Adam Zylbersztejn, 2024. "Commitment to the truth creates trust in market exchange: Experimental evidence," Post-Print halshs-04722343, HAL.
  • Handle: RePEc:hal:journl:halshs-04722343
    DOI: 10.1016/j.geb.2024.09.011
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04722343v1
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-04722343v1/document
    Download Restriction: no

    File URL: https://libkey.io/10.1016/j.geb.2024.09.011?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
    ---><---

    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:hal:journl:halshs-04722343. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    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.