Avoiding the sharp tongue: Anticipated written messages promote fair economic exchange

Erte Xiao, Daniel Edward Houser

Research output: Contribution to journalArticleResearchpeer-review

57 Citations (Scopus)

Abstract

Research in economics and psychology has established that informal non-monetary sanctions, particularly expressions of negative emotion or disapproval, can enforce fair economic exchange. Scholars, however, are only beginning to understand the reasons non-monetary sanctions affect economic outcomes. Here we provide evidence that a preference for avoiding written expression of disapproval, or negative emotion, plays an important role in promoting fair decision making. We study one-shot Dictator games where one subject has the right to determine a division of an amount of money between herself and her receiver. In relation to the standard game, we find significantly fewer earning-maximizing decisions when receivers can react to offers with ex post written messages. We further find that credible threats of monetary sanctions, while economically inefficient, are significantly more effective than written messages in deterring selfishness. Our data provide new perspectives on the role of communication in promoting economic efficiency in social environments, and support economic theories of decision incorporating psychological factors such as guilt, shame, and self-deception.
Original languageEnglish
Pages (from-to)393 - 404
Number of pages12
JournalJournal of Economic Psychology
Volume30
Issue number3
DOIs
Publication statusPublished - 2009

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