Posted offers with charitable promises: True preferences and strategic behavior

Abstract

We report experimental findings on the role of charitable promises in settings with posted offers. We vary the enforceability of such promises within variants of ultimatum games where the proposer suggests a split between herself, the responder and a charitable donation. By reneging on initial pledges, dishonest proposers can change the final allocation to their advantage. Providing ex post information on actual donations while leaving the contract incomplete outperforms a complete contract where proposers cannot renege on their charitable promises. The ex post information allows proposers to improve their image by voluntarily giving more than pledged and thus proving that the charitable pledge was not used for strategic reasons. We identify proposer competition as another (surprising) mechanism that partly eliminates cheating among accepted offers, but it also favors offers without charitable pledge.