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Cooperation and Reciprocity: a Theoretical Approach

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  • Marcello Basili
  • Maurizio Franzini

Abstract

Cooperation among genetically unrelated agents occurs in many situations where economic theory would not expect it. A too narrow conception of self-interest is widely considered the culprit. In particular, relying on experimental evidence in plenty, we consider strong reciprocity rules of behaviour, according to which it is worth bearing the cost of punishing those who defect, and we give analytical foundation to such behaviour – and more generally to cooperation-proneness. The basic idea is that most agents may include self-esteem in their utility function and actually produce or destroy self-esteem through their effective behaviour. The latter amounts to introducing a moral system in individual behaviour in such a way to make it amenable to rational maximization. We also show how the presence of cooperation-prone agents may impact on the best contract in Principal-Agents situations by altering the convenience of gift giving and trust.

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Bibliographic Info

Paper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 91.

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Length: 19
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:sap:wpaper:wp91

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Keywords: agency; altruism; self-interest; punishment; reciprocity.;

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  1. Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1997. "Reciprocity as a contract enforcement device: experimental evidence," ULB Institutional Repository 2013/5911, ULB -- Universite Libre de Bruxelles.
  2. Marcello Basili & Cristina Duranti & Maurizio Franzini, 2004. "Networks, Trust and Institutional Complementarities," Rivista di Politica Economica, SIPI Spa, vol. 94(1), pages 159-180, January-F.
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