A Theory of Reciprocity

27 Pages Posted: 3 Apr 2000

See all articles by Armin Falk

Armin Falk

briq - Institute on Behavior & Inequality

Urs Fischbacher

University of Konstanz - Faculty of Economics and Statistics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2001

Abstract

This paper presents a formal theory of reciprocity. Reciprocity means that people reward kind actions and punish unkind ones. The theory takes into account that people evaluate the kindness of an action not only by its consequences but also by the intention underlying this action. The theory explains the relevant stylized facts of a wide range of experimental games. Among them are the ultimatum game, the gift-exchange game, a reduced best-shot game, the dictator game, the prisoner's dilemma, and public goods games. Furthermore, the theory explains why the same consequences trigger different reciprocal responses in different environments Finally the theory explains why in bilaterial interactions outcomes tend to be "fair" whereas in competitive markets even extremely unfair distributions may arise.

Keywords: Reciprocity, Fairness, Cooperation, Competition, Game Theory

JEL Classification: C7, C91, C92, D64, H41

Suggested Citation

Falk, Armin and Fischbacher, Urs, A Theory of Reciprocity (April 2001). Institute for Empirical Research in Economics Working Paper No. 6; CESifo Working Paper Series No.457. Available at SSRN: https://ssrn.com/abstract=203115

Armin Falk (Contact Author)

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Straße 5-9
Bonn, 53113
Germany

HOME PAGE: http://www.briq-institute.org/

Urs Fischbacher

University of Konstanz - Faculty of Economics and Statistics ( email )

Universitaetsstr. 10
78457 Konstanz
Germany

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