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Contracting Under Reciprocal Altruism

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  • Shchetinin, Oleg

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

I show that a simple formal model of reciprocal altruism is able to predict human behavior in contracting situations, puzzling when considered within selfishness assumption. For instance, motivation and performance crowding-out are explained by a signaling mechanism in which provision of an extrinsic incentive signals non-generosity of the Principal and decreases Agent’s intrinsic motivation. The model’s equilibrium predicts behavior in the Control Game of Falk and Kosfeld and in a variant of Trust Game by Fehr and Rockenbach. This suggests that reciprocal altruism modeling could be fruitful more generally in applications of contract theory.

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File URL: http://hdl.handle.net/2077/21529
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 421.

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Length: 39 pages
Date of creation: 09 Dec 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0421

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: Reciprocal Altruism; Extrinsic and intrinsic motivation; Contract Theory; Behavioral Economics.;

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References

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Citations

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Cited by:
  1. Danilov, Anastasia & Sliwka, Dirk, 2013. "Can Contracts Signal Social Norms? Experimental Evidence," IZA Discussion Papers 7477, Institute for the Study of Labor (IZA).
  2. Shchetinin, Oleg, 2012. "Motivated Agents with Career Concerns: Signalling skills and organizational involvement," Working Papers in Economics 524, University of Gothenburg, Department of Economics.
  3. Bassi, Matteo & Pagnozzi, Marco & Piccolo, Salvatore, 2014. "Optimal contracting with altruism and reciprocity," Research in Economics, Elsevier, vol. 68(1), pages 27-38.

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