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Committees and reciprocity

  • Hahn, Volker
  • Mühe, Felix

In this paper we examine the impact of reciprocal motives on decision-making in a committee. We show that each strategy profile that constitutes an equilibrium without reciprocity also represents an equilibrium under reciprocity. Under reciprocity, additional equilibria may exist. All of them imply lower material payoffs and lower overall utility for a large majority of members compared to equilibria that also represent equilibria without reciprocity. We discuss mechanisms such as incentive contracts that may eliminate the negative effects of reciprocity. In a dynamic framework we show that "psychological logrolling equilibria" may exist, where some agents perceive others as kind and therefore accept projects that are detrimental to themselves but beneficial to others.

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Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 57 (2009)
Issue (Month): 1 (January)
Pages: 26-47

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Handle: RePEc:eee:matsoc:v:57:y:2009:i:1:p:26-47
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505565

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  1. Georg Kirchsteiger & Martin Dufwenberg, 2004. "A theory of sequential reciprocity," ULB Institutional Repository 2013/5899, ULB -- Universite Libre de Bruxelles.
  2. Segal, Uzi & Sobel, Joel, 2007. "Tit for tat: Foundations of preferences for reciprocity in strategic settings," Journal of Economic Theory, Elsevier, vol. 136(1), pages 197-216, September.
  3. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  4. Simon Gaechter & Armin Falk, . "Reputation and Reciprocity: Consequences for the Labour Relation," IEW - Working Papers 019, Institute for Empirical Research in Economics - University of Zurich.
  5. John Geanakoplos & David Pearce & Ennio Stacchetti, 2010. "Psychological Games and Sequential Rationality," Levine's Working Paper Archive 587, David K. Levine.
  6. Gersbach, Hans & Schneider, Maik, 2012. "Tax Contracts and Elections," CEPR Discussion Papers 9054, C.E.P.R. Discussion Papers.
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  8. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2008. "Testing theories of fairness--Intentions matter," Games and Economic Behavior, Elsevier, vol. 62(1), pages 287-303, January.
  9. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  10. Rabin, Mathew, 2002. "A Perspective on Psychology and Economics," Department of Economics, Working Paper Series qt4z78n1r9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
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  13. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers 1812, C.E.P.R. Discussion Papers.
  14. Fehr, Ernst & Gachter, Simon, 1998. "Reciprocity and economics: The economic implications of Homo Reciprocans1," European Economic Review, Elsevier, vol. 42(3-5), pages 845-859, May.
  15. Kiel, Alexandra & Gerling, Kerstin & Schulte, Elisabeth & Grüner, Hans Peter, 2003. "Information acquisition and decision making in committees: a survey," Working Paper Series 0256, European Central Bank.
  16. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  17. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
  18. Ernst Fehr & Urs Fischbacher, 2002. "Why Social Preferences Matter -- The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives," Economic Journal, Royal Economic Society, vol. 112(478), pages C1-C33, March.
  19. Fong, Christina M. & Bowles, Samuel & Gintis, Herbert, 2006. "Strong reciprocity and the welfare state," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
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