Satisfaction Guaranteed: When Moral Hazard meets Moral Preferences / James Andreoni.

Format:

Book

Author/Creator:

Andreoni, James.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23352.

NBER working paper series no. w23352

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Satisfaction Guaranteed

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

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.

Notes:

Print version record

April 2017.