Keeping Promises and Contracts

Keeping a promise and contract is an action that respects a moral and legal norm, but that is, at times, costly and unprofitable for the promisor. There are reasons for individuals to keep promises and contracts beyond legal remedies and reputational concerns. This entry reviews the type of commitment created by contractual promises, the leading explanations of promise-keeping behavior and recent evidence for the latter as collected in laboratory experiments. In the end, it discusses avenues for future research and recent applications of the results collected so far for the design of contracts and their legal enforcement.