Norm-Based Enforcement of Promises

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 inter- nally 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 costs to punish the promisor for uncooperative actions. Our results suggest that the same moral reasons that moti- vate 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 enforce- ment 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.