[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_9129.html
   My bibliography  Save this paper

Bargaining With Charitable Promises: True Preferences and Strategic Behavior

Author

Listed:
  • Andreas Lange
  • Claudia Schwirplies
Abstract
We report experimental findings on the role of charitable promises in bargaining settings. We vary the enforceability of such promises within variants of ultimatum games where the proposer suggest a split between himself, the responder and a char-itable donation. By reneging on initial pledges, dishonest proposers can turn the bargaining power to their advantage. Providing ex post information on actual dona-tions while leaving the contract incomplete outperforms a complete contract where proposers cannot renege on their charitable promises. The ex post information allows proposers to improve their (self-)image by voluntarily giving more than pledged and thus proving that the charitable pledge was not used for strategic reasons. We identify proposer competition as another (surprising) mechanism that partly eliminates cheat-ing among accepted offers. We relate our findings to calls for information provision on actual CSR activities within the management literature.

Suggested Citation

  • Andreas Lange & Claudia Schwirplies, 2021. "Bargaining With Charitable Promises: True Preferences and Strategic Behavior," CESifo Working Paper Series 9129, CESifo.
    • Handle: RePEc:ces:ceswps:_9129
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp9129_0.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Roland Bénabou & Ralf Martin & Alexandra Roulet, 2023. "Environmental Preferences and Technological Choices: Is Market Competition Clean or Dirty?," American Economic Review: Insights, American Economic Association, vol. 5(1), pages 1-20, March.
    2. Cartwright, Edward & Menezes, Matheus L.C., 2014. "Cheating to win: Dishonesty and the intensity of competition," Economics Letters, Elsevier, vol. 122(1), pages 55-58.
    3. Amihai Glazer & Kai A. Konrad, 2008. "A Signaling Explanation for Charity," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 713-722, Springer.
    4. Pascual-Ezama, David & Prelec, Drazen & Dunfield, Derek, 2013. "Motivation, money, prestige and cheats," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 367-373.
    5. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    6. Charness, Gary & Dufwenberg, Martin, 2003. "Promises & Partnership," Research Papers in Economics 2003:3, Stockholm University, Department of Economics.
    7. Klaus CONRAD, 2005. "Price Competition and Product Differentiation when Goods have Network Effects," Industrial Organization 0502002, University Library of Munich, Germany.
    8. Matthew J. Kotchen, 2006. "Green Markets and Private Provision of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 114(4), pages 816-845, August.
    9. Urs Fischbacher & Franziska Föllmi-Heusi, 2013. "Lies In Disguise—An Experimental Study On Cheating," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 525-547, June.
    10. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    11. Timothy Besley & Maitreesh Ghatak, 2017. "Profit with Purpose? A Theory of Social Enterprise," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 19-58, August.
    12. Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-555, March.
    13. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    14. Fischbacher, Urs & Fong, Christina M. & Fehr, Ernst, 2009. "Fairness, errors and the power of competition," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 527-545, October.
    15. Tore Ellingsen & Magnus Johannesson, 2004. "Promises, Threats and Fairness," Economic Journal, Royal Economic Society, vol. 114(495), pages 397-420, April.
    16. Rahwan, Zoe & Hauser, Oliver P. & Kochanowska, Ewa & Fasolo, Barbara, 2018. "High stakes: A little more cheating, a lot less charity," Journal of Economic Behavior & Organization, Elsevier, vol. 152(C), pages 276-295.
    17. Ernst Fehr & Alexander Klein & Klaus M Schmidt, 2007. "Fairness and Contract Design," Econometrica, Econometric Society, vol. 75(1), pages 121-154, January.
    18. Matthew J. Kotchen, 2009. "Voluntary Provision of Public Goods for Bads: A Theory of Environmental Offsets," Economic Journal, Royal Economic Society, vol. 119(537), pages 883-899, April.
    19. Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
    20. Kotchen, Matthew J., 2005. "Impure public goods and the comparative statics of environmentally friendly consumption," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 281-300, March.
    21. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    22. Roland Bénabou & Jean Tirole, 2010. "Individual and Corporate Social Responsibility," Economica, London School of Economics and Political Science, vol. 77(305), pages 1-19, January.
    23. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, September.
    24. Werner Güth & Carsten Schmidt & Matthias Sutter, 2007. "Bargaining outside the lab - a newspaper experiment of a three-person ultimatum game," Economic Journal, Royal Economic Society, vol. 117(518), pages 449-469, March.
    25. Cappelen, Alexander W. & Sørensen, Erik Ø. & Tungodden, Bertil, 2013. "When do we lie?," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 258-265.
    26. Bernd Irlenbusch, 2006. "Are non-binding contracts really not worth the paper?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 21-40.
    27. Matthew J. Kotchen, 2009. "Voluntary Provision of Public Goods for Bads: A Theory of Environmental Offsets," Economic Journal, Royal Economic Society, vol. 119(537), pages 883-899, April.
    28. Sprinkle, Geoffrey B. & Maines, Laureen A., 2010. "The benefits and costs of corporate social responsibility," Business Horizons, Elsevier, vol. 53(5), pages 445-453, September.
    29. Gary Charness & Martin Dufwenberg, 2006. "Promises and Partnership," Econometrica, Econometric Society, vol. 74(6), pages 1579-1601, November.
    30. Doru Cojoc & Adrian Stoian, 2014. "Dishonesty and charitable behavior," Experimental Economics, Springer;Economic Science Association, vol. 17(4), pages 717-732, December.
    31. Bock, Olaf & Baetge, Ingmar & Nicklisch, Andreas, 2014. "hroot: Hamburg Registration and Organization Online Tool," European Economic Review, Elsevier, vol. 71(C), pages 117-120.
    32. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    33. Tammy Harris & James W. Hardin, 2013. "Exact Wilcoxon signed-rank and Wilcoxon Mann–Whitney ranksum tests," Stata Journal, StataCorp LP, vol. 13(2), pages 337-343, June.
    34. Houser, Daniel & Vetter, Stefan & Winter, Joachim, 2012. "Fairness and cheating," European Economic Review, Elsevier, vol. 56(8), pages 1645-1655.
    35. Chien-Yu Lai & Andreas Lange & John A. List & Michael K. Price, 2017. "The Business of Business is Business: Why (Some) Firms Should Provide Public Goods when they Sell Private Goods," NBER Working Papers 23105, National Bureau of Economic Research, Inc.
    36. Jason Dana & Roberto Weber & Jason Kuang, 2007. "Exploiting moral wiggle room: experiments demonstrating an illusory preference for fairness," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 67-80, October.
    37. Menusch Khadjavi, 2017. "Indirect Reciprocity and Charitable Giving— Evidence from a Field Experiment," Management Science, INFORMS, vol. 63(11), pages 3708-3717, November.
    38. John Morgan & Justin Tumlinson, 2019. "Corporate Provision of Public Goods," Management Science, INFORMS, vol. 65(10), pages 4489-4504, October.
    39. Brocas, Isabelle & Carrillo, Juan D. & Montgomery, Mallory, 2021. "Shaming as an incentive mechanism against stealing: Behavioral and physiological evidence," Journal of Public Economics, Elsevier, vol. 194(C).
    40. Yue Wu & Kaifu Zhang & Jinhong Xie, 2020. "Bad Greenwashing, Good Greenwashing: Corporate Social Responsibility and Information Transparency," Management Science, INFORMS, vol. 66(7), pages 3095-3112, July.
    41. Mario Testa & Antonio D’Amato, 2018. "Does charity affect economic bargaining? Exploring gender × social distance interactions," Social Responsibility Journal, Emerald Group Publishing Limited, vol. 16(1), pages 109-128, December.
    42. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
    43. repec:wly:soecon:v:81:4:y:2015:p:1012-1024 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    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. Sanjit Dhami, 2017. "Human Ethics and Virtues: Rethinking the Homo-Economicus Model," CESifo Working Paper Series 6836, CESifo.
    2. Prasenjit Banerjee & Vegard Iversen & Sandip Mitra & Antonio Nicolò & Kunal Sen, 2018. "Politicians and Their Promises in an Uncertain World: Evidence from a Lab-in-the-Field Experiment in India," Economics Discussion Paper Series 1806, Economics, The University of Manchester.
    3. Andreoni, James & Serra-Garcia, Marta, 2021. "Time inconsistent charitable giving," Journal of Public Economics, Elsevier, vol. 198(C).
    4. Kyota Eguchi, 2017. "Guilty Conscience And Incentives With Performance Assessment Errors," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 434-450, January.
    5. Marie Claire Villeval, 2019. "Comportements (non) éthiques et stratégies morales," Revue économique, Presses de Sciences-Po, vol. 70(6), pages 1021-1046.
    6. Behnk, Sascha & Barreda-Tarrazona, Iván & García-Gallego, Aurora, 2014. "The role of ex post transparency in information transmission—An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 101(C), pages 45-64.
    7. Reuben, Ernesto & Stephenson, Matt, 2013. "Nobody likes a rat: On the willingness to report lies and the consequences thereof," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 384-391.
    8. Alain Cohn & Tobias Gesche & Michel André Maréchal, 2022. "Honesty in the Digital Age," Management Science, INFORMS, vol. 68(2), pages 827-845, February.
    9. Radu, Vranceanu & Delphine, Dubart, 2019. "Experimental evidence on deceitful communication: does everyone have a price ?," ESSEC Working Papers WP1806, ESSEC Research Center, ESSEC Business School.
    10. Serra Garcia, M. & van Damme, E.E.C. & Potters, J.J.M., 2010. "Which Words Bond? An Experiment on Signaling in a Public Good Game (replaced by TILEC DP 2011-055)," Other publications TiSEM 5ed24dc3-e6cf-4fa4-bace-2, Tilburg University, School of Economics and Management.
    11. Michele Fioretti, 2022. "Caring or Pretending to Care? Social Impact, Firms' Objectives, and Welfare (former title: Social Responsibility and Firm's Objectives)," SciencePo Working papers hal-03393065, HAL.
    12. Gneezy, Uri & Saccardo, Silvia & Serra-Garcia, Marta & van Veldhuizen, Roel, 2020. "Bribing the Self," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 120, pages 311-324.
    13. Serra Garcia, M. & van Damme, E.E.C. & Potters, J.J.M., 2011. "Lying About What you Know or About What you Do? (replaces CentER DP 2010-033)," Discussion Paper 2011-139, Tilburg University, Center for Economic Research.
    14. Ockenfels, Axel & Werner, Peter, 2012. "‘Hiding behind a small cake’ in a newspaper dictator game," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 82-85.
    15. Sutan, Angela & Grolleau, Gilles & Mateu, Guillermo & Vranceanu, Radu, 2018. "“Facta non verba”: An experiment on pledging and giving," Journal of Economic Psychology, Elsevier, vol. 65(C), pages 1-15.
    16. Fosgaard, Toke R. & Soetevent, Adriaan R., 2022. "I will donate later! A field experiment on cell phone donations to charity," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 549-565.
    17. Dimant, Eugen, 2015. "On Peer Effects: Behavioral Contagion of (Un)Ethical Behavior and the Role of Social Identity," MPRA Paper 68732, University Library of Munich, Germany.
    18. Catrine Jacobsen & Toke Reinholt Fosgaard & David Pascual†Ezama, 2018. "Why Do We Lie? A Practical Guide To The Dishonesty Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 357-387, April.
    19. James Andreoni & Marta Serra-Garcia, 2021. "The Pledging Puzzle: How Can Revocable Promises Increase Charitable Giving?," Management Science, INFORMS, vol. 67(10), pages 6198-6210, October.
    20. Christian Gollier & Sébastien Pouget, 2022. "Investment Strategies and Corporate Behaviour with Socially Responsible Investors: A Theory of Active Ownership," Economica, London School of Economics and Political Science, vol. 89(356), pages 997-1023, October.

    More about this item

    Keywords

    bundling; charity; public good; donation pledges; cheating; prosocial ultimatum game; experiment;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ces:ceswps:_9129. 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    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.