Promising responsibly: an experimental study on partial and conditional promises
Creators: name: Wilson, Rochelle
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 380106
subject: Experimental economics

description: A promise is a common and time-honoured form of communication, used to foster trust and cooperation in social and economic interactions. Promises are considered unwavering commitments. Traditionally, communication has been viewed in economics as cheap talk (Crawford 1998); that is, a claim that is costless, unbinding, non-verifiable, and therefore non-credible (Kim 1996). Farrell and Rabin (1996) claim that cheap talk does not generally lead to efficiency. As a result, standard economic models predict promises to have no impact on behaviour while making strategic economic decisions. However, recent studies in the fields of behavioural and experimental economics have demonstrated that individuals do not consider promises cheap talk. Instead, they are considered signals of intended behaviour. They generate trust and increased levels of cooperation, eventuating in increased payoffs (Charness &amp; Dufwenberg 2006; Ellingsen &amp; Johannesson 2004). Economists have analysed promises extensively as they form social capital capable of achieving more efficient outcomes through cooperation and reduce the cost of transacting. Putnam highlighted “trust as an essential component of social capital because it lubricates cooperation” (Putnam, Leonardi &amp; Nanetti 1994). Interactions would be very costly or cumbersome if not for such self-regulating mechanisms as promises. Cugueró Escofet &amp; Rosanas Martí (2019) argue that existing cultural, social, and personal value systems provide an underpinning for trust based on integrity.

However, promises are sometimes broken for intentional and unintentional reasons. Broken promises result in broken trust and tarnished reputation, as well as psychological costs from guilt, and reduced potential welfare in the long run. Given the potential downsides of breaking promises, the current research introduces and examines different types of promises: partial and conditional promises. An appropriate response in the situations mentioned above may be to make partial promises, a relatively new term found in common parlance.6 In this case, the promisor signals an intention to carry out an action, albeit with less certainty than that afforded by standard promises. Partial promises are statements with escape routes that provide wiggle room (i.e., capacity or scope for negotiation or operation), and especially modifying a previous statement or decision, for individuals who are doubtful about being able to fulfil their promise or have no intentions of doing so. Conditional promises, on the other hand, are different from partial and standard promises, wherein there is an underlying statement that needs to be fulfilled for the promise to be kept. If the underlying statement does not occur, then the promise remains null and void (Bandara 2007).

Studies have shown that including conditional components in certain documents might enhance an agreement’s effectiveness (Helland, Hovi &amp; Sælen 2018). Hence, partial, and conditional promises might be an effective way of promising responsibly. Considering these potential downsides, I investigate alternatives such as partial and conditional promises through a multilevel analysis of the motivational, linguistic, deontic, behavioural, and emotional aspects of promises and promising. There is also no empirical evidence for these alternatives that is on par with the evidence for promises, which is my motivation for doing this work. This thesis uses two-player sequential binary trust games to provide insight into promises. To mimic real-world scenarios, the game design includes two states of the world: good and bad states. One of these states is randomly chosen by the computer during interactions. This represents the risk we face during our everyday interactions due to external situations beyond our control. In some cases, the external situation is in our favour (i.e., good state) and other times the external situation may not be favourable for us to complete a task (i.e., bad state).

This research consists of three individual studies, beginning with a preliminary feasibility study, followed by a controlled laboratory experiment, and finally an online experiment. The first study is a preliminary analysis that focuses on gathering perceptions and norms among individuals about partial promises and full promises. The next study is a controlled laboratory experiment that tests the use of partial promises during strategic games with actual stakes. The final study is an online experiment that compares conditional promises to partial and full promises.

First, I observe that, in the absence of other messages, people are most likely to send partial promise messages and least likely to send full or conditional promise messages. This may be because individuals fear commitment and do not want to give their word when there is risk involved in the future. Full promises, being unwavering commitments, bind people to their word and people may experience negative emotions of guilt while breaking such a promise (Charness et al. 2006), and to reduce negative feelings, individuals may avoid making such promises. Partial promises are flexible and ambiguous statements that are easy to make regardless of the situation. They also do not invite as many negative emotions, like anger, sadness, resentment, or equivalent punishment to the same extent when broken.

Second, I find communication significantly helps promote trust. Individuals are more likely to trust someone who sends any message compared to those who send none. However, I find that individuals are much more likely to trust full promise messages compared to other forms of communication, such as partial or conditional messages. Individuals trust statements that provide complete assurance to do something in the future more when compared to flexible statements. Humans are familiar with the term promise: They find it easy to trust a promise and emotions of trust are associated with this word. They prefer guarantees over ‘maybe/if/when’ statements.

Third, I find that communication helps increase the trustworthiness of individuals. Those who send a promise are more likely to remain trustworthy compared to those who send no message. In the laboratory experiment, I find that all promisors are equally likely to remain trustworthy regardless of the type of message sent. However, those who send full promises are somewhat more likely to remain trustworthy during times of risk caused by negative world events. This finding is supported by existing theory that suggests individuals feel guilty when they let down other people's expectations; hence, they keep their promises (Charness et al. 2006, Ederer et al. 2017). Since full promises raise high expectations regardless of external situations, these promisors are more likely to remain trustworthy even during negative world events as they do not like to let down others’ expectations. In the online experiment, I find that all promisors are equally likely to remain trustworthy regardless of the type of promise message sent during both states of the world. This finding is consistent with Vanberg (2008) who suggests individuals also tend to keep their promises as they are committed to their word and prefer to behave in line with what they have said. Another reason might be due to self selection. Those who send a message are more likely to keep their promise in the first place and others might want to avoid sending a message if they do not intend to keep one. This is supported by literature and suggested that this behaviour maybe considered as internal consistency (Ismayilov et al. 2016).

Finally, I find that the trustworthiness of a partial promisor (i.e., likelihood to return, after sending a partial promise) is highest when their actions are being recorded. This is not the case for other messages, like full or conditional promises. The finding indicates partial promises are equally efficient in promoting trustworthy behaviour and more so compared to full promises when there is fear of negative reputation in the future. Findings also suggest that partial and conditional promises build trust more sustainably; that is, individuals are more likely to trust someone again after a broken partial or conditional promise in the past compared to someone who broke a full promise. Hence, the use of such promises is more appropriate when there is risk involved in the future and there is a higher likelihood to renege.

Overall, I conclude that those who make full promises are most likely to be trusted. However, all promisors are almost equally likely to remain trustworthy; partial promisors more so when being recorded. Full promises are relatively more rigid and may result in broken trust, lost reputation, and punishment if broken. Although alternatives, such as conditional and partial promises, are trusted less compared to full promises, I find evidence to suggest that those who send such promises are equally likely to remain trustworthy. These alternatives are suitable tools to build trust sustainably and enhance trustworthiness when there is risk involved in the future.

This research explores different types of promises and circumstances under which we can apply them. In doing so, this research contributes to the empirical literature by shedding light on the existing promise theory through a new lens and providing information on new and alternative forms of promising. There is also substantial work and multiple theories that discuss and try to answer the question ‘why do individuals keep their promises?’. This thesis helps answer this question by suggesting that the motivation for individuals to keep their promises may be, in part, because individuals are committed to their word and do not like failing to meet others' expectations, and also because cooperators may be more likely to send promises than non-cooperators.

In Chapter 1, I will discuss the history and relevance of promises. I will first discuss the relationship between trust and promises and how they enhance cooperation. Further, I will elaborate on the alternative kinds of promises, such as partial and conditional promises and discuss how I apply them to this research. Chapter 2 will go on to discuss existing literature on promises to contextualise how our research is positioned within this literature. Chapter 3 discusses the importance of this research and presents Promise, partial promise, conditional promise, communication, trust, expectations, experiments, trust game, cooperation, psychological contracts, cheap talk, renege, game tree.the main research questions. It outlines the structure of this research and elaborates on how promises sit within the field of experimental economics and discuss the methodology. Chapters 4 to 6 elaborate on the empirical evidence related to full, partial, and conditional promises. Chapter 7 provides a conclusion and discusses the main contributions and implications of this research to the literature and more practically to everyday life.