Economic Implications of the Moonlighting Game: A Case Study of the Non-binding Agreement on the French Market

The main goal of the thesis is to study the impact of the conclusion of a non-binding agreement on the efficiency and incentives of the companies to keep the promise on the French market. The case study analysis is based on the moonlighting game formulated by Abbink, Irlenbusch, and Renner (2000), backed by the theoretical framework of behavioral law and economics. Results show that desire to fulfill obligations under non-binding commitment comes mainly from the supplier side, while the client does not reply with reciprocity. Findings demonstrate that an efficient outcome cannot be achieved purely by the conclusion of the non-binding contract in the case study, and it is a discount that generates cooperation and leads to efficiency. Another finding is that the financial losses of the non-recurring service supplier caused by the client’s breach of commitment outweigh the losses of the recurring service provider. Economic implications and recommendations from the thesis bring valuable insights for company policymakers, firms, and further researchers. Key words: Economics, Contract Law, Behavioral Economics, Non-binding Contract JEL Classification: K120, K290, A10, G4