A Theory of Reciprocity

28 Pages Posted: 8 Nov 2001

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: October 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 bilateral interactions outcomes tend to be 'fair' whereas in competitive markets even extremely unfair distributions may arise.

Keywords: Reciprocity, fairness, cooperation, game theory

JEL Classification: C70, C91, C92, D64, H41

Suggested Citation

Falk, Armin and Fischbacher, Urs, A Theory of Reciprocity (October 2001). CEPR Discussion Paper No. 3014. Available at SSRN: https://ssrn.com/abstract=289566

Armin Falk (Contact Author)

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Stra├če 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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