The Cognitive Foundations of Tacit Commitments

44 Pages Posted: 10 May 2018 Last revised: 19 Feb 2021

See all articles by Tigran Melkonyan

Tigran Melkonyan

University of Alabama - Department of Economics, Finance and Legal Studies

Hossam Zeitoun

University of Warwick - Warwick Business School

Nick Chater

University of Warwick - Warwick Business School

Date Written: April 25, 2018

Abstract

People often make, and are held to account for, purely tacit commitments in interactions with other people: commitments which have never been explicitly articulated or agreed. Moreover, unspoken, tacit commitments are often perceived as binding: people often stick to, and are expected to stick to, these commitments, even where it might seem against their interests to do so. These commitments have been widely seen as crucial underpinning for human collaboration and cooperation. Yet how do such commitments arise, and are they compatible with human rationality? This paper provides a formal, reasoning-based account of tacit commitments based on “virtual bargaining”—a mode of reasoning that joins elements of individualistic and collaborative reasoning. We complement existing accounts by showing that even purely self-interested individuals can, under certain conditions, tacitly commit to punishing counterparts who violate an unenforceable agreement, or to cooperating in the Centipede game and the finitely repeated Prisoner’s Dilemma game.

JEL Classification: C7, D81

Suggested Citation

Melkonyan, Tigran and Zeitoun, Hossam and Chater, Nick, The Cognitive Foundations of Tacit Commitments (April 25, 2018). Available at SSRN: https://ssrn.com/abstract=3168669 or http://dx.doi.org/10.2139/ssrn.3168669

Tigran Melkonyan (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

361 Stadium Dr, Ste 200
Tuscaloosa, AL 35487
United States

Hossam Zeitoun

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Nick Chater

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

HOME PAGE: http://www.wbs.ac.uk/about/person/nick-chater/

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