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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.

Suggested Citation

  • Shchetinin, Oleg, 2009. "Contracting Under Reciprocal Altruism," Working Papers in Economics 421, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0421
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    File URL: http://hdl.handle.net/2077/21529
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    Cited by:

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

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    More about this item

    Keywords

    Reciprocal Altruism; Extrinsic and intrinsic motivation; Contract Theory; Behavioral Economics.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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