|Fehr, Ernst; Schmidt, Klaus M. (1999): A theory of fairness, competition, and cooperation. In: Quarterly Journal of Economics, Vol. 114, No. 3: pp. 817-868|
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There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.
Economics > Chairs > Seminar for Economic Theory
|Subjects:||300 Social sciences > 330 Economics|
|Deposited On:||15. Apr 2014 09:01|
|Last Modified:||29. Apr 2016 09:18|
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A Theory of Fairness, Competition, and Cooperation. (deposited 15. Apr 2014 09:01)
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