Promise Theory - Economics

Economics

Promises can be valuable to the promisee or even to the promiser. They might also lead to costs. There is thus an economic story to tell about promises. The economics of promises naturally motivate `selfish agent' behaviour and Promise Theory can be seen as a motivation for game theoretical decision making, in which multiple promises play the role of strategies in a game.

The theory of promises as applied to organization bears some resemblance to the theory of Institutional Diversity by Elinor Ostrom. Several of the same themes and consideration appear; the main difference is that Ostrom focuses, like many authors, on the role of external rules and obligations. Promise Theory takes the opposite viewpoint that obeyance of rules is a voluntary act and hence it makes sense to focus on those voluntary promises. An attempt to force obeyance without a promise is considered to constitute an attack. One benefit of a Promise Theory approach is that it does not require special structural elements (e.g. Ostrom's institutional "Positions") to describe different roles in a collaborate network—these may also be viewed as promises in Promise Theory; thus there is a parsimony that helps to avoid an explosion of concepts, and perhaps more importantly admits mathematical formalization. The algebra and calculus of promises allows simple reasoning in a mathematical framework.