Satisfaction Guaranteed: When Moral Hazard meets Moral Preferences /
Andreoni, James.
Satisfaction Guaranteed: When Moral Hazard meets Moral Preferences / James Andreoni. - Cambridge, Mass. National Bureau of Economic Research 2017. - 1 online resource: illustrations (black and white); - NBER working paper series no. w23352 . - Working Paper Series (National Bureau of Economic Research) no. w23352. .
April 2017.
Theorists and policy analysts have convincingly argued that greater trust makes a more efficient society by eliminating costly contracts or expensive reputations. Concurrently, experiments suggest that reciprocity is a potent substitute for law when compliance with contracts is imperfectly enforced. This paper examines these issues within the context of a common trust-building contract device: satisfaction guaranteed. We find that satisfaction guaranteed indeed builds trust and improves efficiency. Interestingly, sellers offering a guarantee are more trustworthy than those who don't, even when honoring it is fully voluntary, but the guarantee only elicits the trust of buyers when it has legal backing.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.
Satisfaction Guaranteed: When Moral Hazard meets Moral Preferences / James Andreoni. - Cambridge, Mass. National Bureau of Economic Research 2017. - 1 online resource: illustrations (black and white); - NBER working paper series no. w23352 . - Working Paper Series (National Bureau of Economic Research) no. w23352. .
April 2017.
Theorists and policy analysts have convincingly argued that greater trust makes a more efficient society by eliminating costly contracts or expensive reputations. Concurrently, experiments suggest that reciprocity is a potent substitute for law when compliance with contracts is imperfectly enforced. This paper examines these issues within the context of a common trust-building contract device: satisfaction guaranteed. We find that satisfaction guaranteed indeed builds trust and improves efficiency. Interestingly, sellers offering a guarantee are more trustworthy than those who don't, even when honoring it is fully voluntary, but the guarantee only elicits the trust of buyers when it has legal backing.
System requirements: Adobe [Acrobat] Reader required for PDF files.
Mode of access: World Wide Web.