The Scope of Cooperation: Values and Incentives

Innocenzo Gasparini Institute for Economic Research Working Paper No. 328

CESifo Working Paper Series, No. 2236

55 Pages Posted: 5 Oct 2007

See all articles by Guido Tabellini

Guido Tabellini

Bocconi University - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

Date Written: October 2007

Abstract

What explains the range of situations in which individuals cooperate? This paper studies a model where individuals respond to incentives but are also influenced by norms of good conduct inherited from earlier generations. Parents rationally choose what values to transmit to their offspring, and this choice is influenced by the spatial patterns of external enforcement and of likely future transactions. The equilibrium displays strategic complementarities between values and current behavior, which reinforce the effects of changes in the external environment. Values evolve gradually over time, and if the quality of legal enforcement is chosen under majority rule, there is path dependence: adverse initial conditions may lead to a unique equilibrium where legal enforcement remains weak and individual values discourage cooperation.

Keywords: culture, cooperation, institutions, cultural transmission

JEL Classification: A10

Suggested Citation

Tabellini, Guido, The Scope of Cooperation: Values and Incentives (October 2007). Innocenzo Gasparini Institute for Economic Research Working Paper No. 328; CESifo Working Paper Series, No. 2236. Available at SSRN: https://ssrn.com/abstract=1019265 or http://dx.doi.org/10.2139/ssrn.1019265

Guido Tabellini (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Center for Economic Studies and Ifo Institute for Economic Research (CESifo)

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Munich, DE-81679
Germany

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