Cooperation, reciprocity and self-esteem: A theoretical approach
AbstractCooperation occurs even where it is not predicted by economic theory, owing to what is widely recognized as too narrow a conception of self-interest. In particular, relying on plenty of experimental evidence, it has been maintained that agents adopt such a strong reciprocity rules in their behavior as make it worthwhile to punish those who defect or do not act fairly, costly though as this may be. We propose to lay the analytical foundation of such behavior – and more generally to cooperation-proneness – by considering self-esteem. Agents may include self-esteem in their utility (or goal) function and actually produce or destroy self-esteem through their behavior. This amounts to introducing a moral system in individual behavior in such a way as to make it amenable to rational maximization. We also show how the impact of self-esteem on the best contract in Principal-Agents situations and how such impact differs in Moral Hazard and Adverse Selection situations.
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Bibliographic InfoPaper provided by Department of Economic Policy, Finance and Development (DEPFID), University of Siena in its series Department of Economic Policy, Finance and Development (DEPFID) University of Siena with number 007.
Date of creation: Nov 2007
Date of revision:
self-esteem; reciprocity; motivation; incentive; agency.;
Find related papers by JEL classification:
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
- NEP-CBE-2008-01-05 (Cognitive & Behavioural Economics)
- NEP-EVO-2008-01-05 (Evolutionary Economics)
- NEP-EXP-2008-01-05 (Experimental Economics)
- NEP-SOC-2008-01-05 (Social Norms & Social Capital)
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