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 charitable donation. By reneging on initial pledges, dishonest proposers can turn the bargaining power to their advantage. Providing ex post information on actual donations while leaving the contract incomplete outperforms a complete contract where proposers cannot renege on their charitable promises. The ex post information allows proposers to gain reputation 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 almost eliminates cheating among accepted offers. We relate our findings to calls for information provision on actual CSR activities within the management literature
Invited by: Research Seminar Committee
Local Organizer: Alessandro Tavoni