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Contracting under Reciprocal Altruism

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  • Shchetinin, Oleg

Abstract

I develop a model of reciprocal altruism which accounts for some evidence in contracting situations, which are paradoxical from the point of view of neoclassical contract theory with selfish actors. My model predicts the crowding-out effect, observed in the Trust Game with the possibility of a fine; for the Control Game the model predicts that an equilibrium can exhibit ”no effect of control”, ”hidden cost of control”, or ”positive effect of control”, depending on the characteristics of the actors, as observed in the experiments. This suggests that reciprocal altruism modeling could be fruitful more generally in applications of contract theory.

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Bibliographic Info

Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-078.

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Date of creation: Aug 2009
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Handle: RePEc:tse:wpaper:22188

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Keywords: contract theory; signaling; behavioral economics;

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Citations

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Cited by:
  1. Bassi, Matteo & Pagnozzi, Marco & Piccolo, Salvatore, 2014. "Optimal contracting with altruism and reciprocity," Research in Economics, Elsevier, vol. 68(1), pages 27-38.
  2. Danilov, Anastasia & Sliwka, Dirk, 2013. "Can Contracts Signal Social Norms? Experimental Evidence," IZA Discussion Papers 7477, Institute for the Study of Labor (IZA).
  3. Matteo Bassi & Marco Pagnozzi & Salvatore Piccolo, 2013. "Optimal Contracting with Altruism and Reciprocity," CSEF Working Papers 342, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  4. 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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