Norm-based enforcement of promises

Abstract Considerable evidence suggests that people are internally motivated to keep their promises. But it is unclear whether such internal motivations create a meaningful level of commitment in economically relevant situations where promisors have strong self-interested reasons to break their promises. Self-interested incentives to break promises compete with—and so may overcome—the moral motivations of those who are internally motivated to keep them. We experimentally investigate the willingness of third parties to altruistically punish promise breaking. Participants observe a transaction between a potential promisor and promisee and can incur personal costs to punish the promisor for uncooperative actions. Our results suggest that the same moral reasons that motivate promisors to keep their promises make third-party observers more likely to punish promise breaking. This suggests that the same underlying promissory norms drive both (i) promise-keeping behavior in the absence of second- and third-party enforcement mechanisms and (ii) non-legal enforcement mechanisms that arise when third parties can punish potential promisors in a decentralized fashion. This makes it more likely that promissory norms support cooperative behavior