Speaker: Zile Wang

Topic: An Experimental Exploration of Relational Contracts and Social Norms 

Abstract: 

Contract incompletion has numerous social and economic consequences. Relational contracts introduce guiding principles to align the expectations and interests of contracting parties, as well as to cultivate mutual trust and cooperation to address contractual incompleteness. This paper designs an experiment to investigate the mechanism of introducing bystander social appropriateness rating as a guiding principle in relational contracts. Our findings indicate that a third party views more prosocial actions as more socially appropriate. By disclosing to both parties the elicited norms of bystanders, we observe more cooperation and prosocial behavior in the information treatment. In our settings, we discuss the impact of social norms and social preferences on contracting parties. We find that both parties' decisions are positively correlated with the social appropriateness ratings of bystanders. Guilt aversion also influences their decisions..

Location:  via Zoom; Room 318

Meeting Time: Mar. 30th, 2023, 10:00am CST; Mar. 29th, 2023, 21:00 pm EST