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Transferring Trust: Reciprocity Norms and Assignment of Contract

Authors


  • Many thanks for thoughtful feedback from Jennifer Arlen, Ryan Bubb, Richard Brooks, Zev Eigen, David Abrams, Anna Gelpern, Jason Dana, David Hoffman, Jonathan Baron, participants in the 2010 Conference on Empirical Legal Studies, and three anonymous reviewers. Thank you also to participants in the Georgetown Law and Economics Seminar, the New York University Law and Economics Colloquium, and the University of Pennsylvania Faculty Ad Hoc Workshop. Finally, I am grateful for the able research assistance of Eric Merron and Jeff DeWitt.

University of Pennsylvania Law School, 3400 Chestnut St., Philadelphia, PA 19104; email: twilkins@law.upenn.edu. The author is Assistant Professor at University of Pennsylvania Law School.

Abstract

This article presents four experiments testing the prediction that assignment of contract rights erodes the moral obligation to perform. The first three studies used an experimental laboratory game designed to model contractual exchange. Players in the games were less selfish with a previously generous partner than with a third-party player who had purchased the right to the original partner's expected return. The fourth study used a web-based questionnaire, and found that subjects reported that they would require less financial incentive to breach an assigned contract than a contract held by the original promisee. The results of these four experiments provide support for the proposition that a permissible and apparently neutral transfer of a contractual right may nonetheless reduce the likelihood or quality of performance by weakening the norm of reciprocity.

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