Pledges as a Social Influence Device

Abstract: This paper reports the results from a two-person « pledge and give » experiment backed by a simple communication game. Each person’s endowment is private information. In the first stage, each agent informs the other about the amount he/she intends to give, or makes a pledge. In the second stage, each agent makes a contribution to the joint donation. We first show that pledging a fixed proportion of the endowment can be an equilibrium of the communication game. Furthermore, if agents have a strong taste for conformity, the optimal gift is positively related to one’s own endowment and to the pledge of his partner. Data from the lab experiment confirm that subjects pledge approximately 60% of their endowment. Also, pledges have an important social influence role: an agent will increase his/her donation by 20 cents on average if his/her partner pledges one more euro.