Two traditional assumptions in neo-classical economics have beenmaterial self-interest and (commonly known) decision rationality. Sincethere is ample contradictory empirical evidence, many recent attemptshave been made to remodel the situation so that rational behavior ismore in line with actual...

We examine experimentally the impact of communication on trust and cooperation. Our design admits observation of promises, lies, and beliefs. The evidence is consistent with people striving to live up to others' expectations in order to avoid guilt, as can be modeled using psychological game...