Abstract

http://ssrn.com/abstract=255223
 
 

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Theories of Fairness and Reciprocity - Evidence and Economic Applications


Ernst Fehr


University of Zurich - Department of Economics

Klaus M. Schmidt


Ludwig-Maximilians-Universität München - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

December 23, 2000

CESifo Working Paper Series No. 403; University of Zurich, IEER Working Paper No. 75

Abstract:     
Most economic models are based on the self-interest hypothesis that assumes that all people are exclusively motivated by their material self-interest. In recent years experimental economists have gathered overwhelming evidence that systematically refutes the self-interest hypothesis and suggests that many people are strongly motivated by concerns for fairness and reciprocity. Moreover, several theoretical papers have been written showing that the observed phenomena can be explained in a rigorous and tractable manner. These theories in turn induced a new wave of experimental research offering additional exciting insights into the nature of preferences and into the relative performance of competing theories of fairness. The purpose of this paper is to review these recent developments, to point out open questions, and to suggest avenues for future research.

Number of Pages in PDF File: 59

Keywords: Behavioral Economics, Fairness, Reciprocity, Altruism, Experiments, Incentives, Contracts, Competition

JEL Classification: C7, C9, D0, J3

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Date posted: February 9, 2001  

Suggested Citation

Fehr, Ernst and Schmidt, Klaus M., Theories of Fairness and Reciprocity - Evidence and Economic Applications (December 23, 2000). CESifo Working Paper Series No. 403; University of Zurich, IEER Working Paper No. 75. Available at SSRN: http://ssrn.com/abstract=255223

Contact Information

Ernst Fehr
University of Zurich - Department of Economics ( email )
Blümlisalpstrasse 10
Zuerich, 8006
Switzerland
+41 1 634 3709 (Phone)
+41 1 634 4907 (Fax)
Klaus M. Schmidt (Contact Author)
Ludwig-Maximilians-Universität München - Faculty of Economics ( email )
Ludwigstrasse 28
Munich, D-80539
Germany
+49 89 2180 3405 (Phone)
+49 89 2180 3510 (Fax)
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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