IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_331.html
   My bibliography  Save this paper

Evolutionary Norm Enforcement

Author

Listed:
  • Werner Güth
  • Axel Ockenfels

Abstract

Applying an indirect evolutionary approach with endogenous preference formation, we show that a legal system can induce players to reward trust even if material incentives dictate to exploit trust. By analyzing the crowding out or crowding in of trustworthiness implied by various verdict rules, we can assess how a court influences the share of kept promises of "truly" trustworthy players who evolutionarily evolved as trustworthy and of opportunistic players who are only trustworthy if inspired by material incentives.

Suggested Citation

  • Werner Güth & Axel Ockenfels, 2000. "Evolutionary Norm Enforcement," CESifo Working Paper Series 331, CESifo.
    • Handle: RePEc:ces:ceswps:_331
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo_wp331.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Geoffrey Brennan & Werner Güth & Hartmut Kliemt, 2003. "Trust in the Shadow of the Courts," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(1), pages 16-36, March.
    2. Ockenfels, Axel & Selten, Reinhard, 2000. "An Experiment on the Hypothesis of Involuntary Truth-Signalling in Bargaining," Games and Economic Behavior, Elsevier, vol. 33(1), pages 90-116, October.
    3. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
    4. Güth, W. & Kliemt, H., 1993. "Competition or Co-Operation," Discussion Paper 1993-39, Tilburg University, Center for Economic Research.
    5. Bohnet, Iris & Frey, Bruno S. & Huck, Steffen, 2001. "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," American Political Science Review, Cambridge University Press, vol. 95(1), pages 131-144, March.
    6. Selten, Reinhard, 1983. "Evolutionary stability in extensive two-person games," Mathematical Social Sciences, Elsevier, vol. 5(3), pages 269-363, September.
    7. Werner Güth & Hartmut Kliemt, 1994. "Competition Or Co-Operation: On The Evolutionary Economics Of Trust, Exploitation And Moral Attitudes," Metroeconomica, Wiley Blackwell, vol. 45(2), pages 155-187, June.
    8. Williamson, Oliver E, 1993. "Calculativeness, Trust, and Economic Organization," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 453-486, April.
    9. John C Harsanyi, 1997. "Games with incomplete information played by "bayesian" players," Levine's Working Paper Archive 1175, David K. Levine.
    10. Frank, Robert H, 1987. "If Homo Economicus Could Choose His Own Utility Function, Would He Want One with a Conscience?," American Economic Review, American Economic Association, vol. 77(4), pages 593-604, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Axel Ockenfels, 2009. "Marktdesign und Experimentelle Wirtschaftsforschung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 10(s1), pages 31-53, May.
    2. Friederike Mengel & Axel Ockenfels & Werner Güth, 2006. "The Dynamics of Trust and Trustworthiness on EBay. An Evolutionary Analysis of Buyer Insurance and Seller Reputation," Papers on Strategic Interaction 2006-03, Max Planck Institute of Economics, Strategic Interaction Group.
    3. Werner Güth & Friederike Mengel & Axel Ockenfels, 2007. "An Evolutionary Analysis of Buyer Insurance and Seller Reputation in Online Markets," Theory and Decision, Springer, vol. 63(3), pages 265-282, November.
    4. Gãœth, Werner & Ockenfels, Axel, 2005. "The coevolution of morality and legal institutions: an indirect evolutionary approach," Journal of Institutional Economics, Cambridge University Press, vol. 1(2), pages 155-174, December.
    5. Gary Bolton & Axel Ockenfels, 2005. "A stress test of fairness measures in models of social utility," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 957-982, June.
    6. Edward Castronova, 2004. "Achievement Bias in the Evolution of Preferences," Journal of Bioeconomics, Springer, vol. 6(2), pages 195-226, May.
    7. Güth, Werner & Kliemt, Hartmut, 2001. "Langzeiteffekte der Theory of Games and Economic Behavior: Zur Anwendung der Spieltheorie in den (Sozial-)wissenschaften," SFB 373 Discussion Papers 2001,8, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    8. Croson, Rachel & Konow, James, 2007. "Double Standards: Social Preferences and Moral Biases," MPRA Paper 2729, University Library of Munich, Germany.
    9. Werner Güth & Axel Ockenfels, 2002. "The Coevolution of Trust and Institutions in Anonymous and Non-anonymous Communities," Papers on Strategic Interaction 2002-07, Max Planck Institute of Economics, Strategic Interaction Group.
    10. Edward Castronova, "undated". "Achievement Bias in the Evolution of Preferences," Gruter Institute Working Papers on Law, Economics, and Evolutionary Biology 2-1-1010, Berkeley Electronic Press.
    11. Schmitt, Rebecca, 2015. "Incorporating Phenotype Plasticity into the Indirect Evolutionary Approach," MPRA Paper 65734, University Library of Munich, Germany.
    12. Marian Panganiban, 2015. "To friends everything, to strangers the law? An experiment on contract enforcement and group identity," Jena Economics Research Papers 2015-015, Friedrich-Schiller-University Jena.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gãœth, Werner & Ockenfels, Axel, 2005. "The coevolution of morality and legal institutions: an indirect evolutionary approach," Journal of Institutional Economics, Cambridge University Press, vol. 1(2), pages 155-174, December.
    2. Harvey James, 2002. "The Trust Paradox: A Survey of Economic Inquiries Into the Nature of Trust and Trustworthiness," Microeconomics 0202001, University Library of Munich, Germany.
    3. Werner Güth & Hartmut Kliemt & Bezalel Peleg, 2000. "Co‐evolution of Preferences and Information in Simple Games of Trust," German Economic Review, Verein für Socialpolitik, vol. 1(1), pages 83-110, February.
    4. James Jr., Harvey S., 2002. "The trust paradox: a survey of economic inquiries into the nature of trust and trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 47(3), pages 291-307, March.
    5. Maria Vittoria Levati, "undated". "Explaining Private Provision of Public Goods by Conditional Cooperation - An Evoltuionary Approach -," Papers on Strategic Interaction 2002-44, Max Planck Institute of Economics, Strategic Interaction Group.
    6. Friedman, Daniel & Singh, Nirvikar, 2009. "Equilibrium vengeance," Games and Economic Behavior, Elsevier, vol. 66(2), pages 813-829, July.
    7. Marian Panganiban, 2015. "To friends everything, to strangers the law? An experiment on contract enforcement and group identity," Jena Economics Research Papers 2015-015, Friedrich-Schiller-University Jena.
    8. Fali Huang, 2007. "Building Social Trust: A Human-Capital Approach," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 552-573, December.
    9. Anders Poulsen & Gert Svendsen, 2005. "Social Capital and Endogenous Preferences," Public Choice, Springer, vol. 123(1), pages 171-196, April.
    10. Pierpaolo Battigalli, 2006. "Rationalization In Signaling Games: Theory And Applications," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 67-93.
    11. Werner Güth & Axel Ockenfels, 2002. "The Coevolution of Trust and Institutions in Anonymous and Non-anonymous Communities," Papers on Strategic Interaction 2002-07, Max Planck Institute of Economics, Strategic Interaction Group.
    12. Dufwenberg, Martin & Güth, Werner, 1997. "Indirect evolution versus strategic delegation: A comparison of two approaches to explaining economic institutions," SFB 373 Discussion Papers 1997,28, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    13. Breuer, Janice Boucher & McDermott, John, 2009. "Trustworthiness and economic performance," MPRA Paper 16777, University Library of Munich, Germany.
    14. van Damme, E.E.C. & Dufwenberg, M. & Gneezy, U. & Güth, W., 2000. "An Experimental Test of Direct and Indirect Reciprocity in Case of Complete and Incomplete Information," Other publications TiSEM dd58eedd-ce16-44e7-8f5a-1, Tilburg University, School of Economics and Management.
    15. Petersen, Verner C., 2005. "The otherworldly view of economics - and its consequences," Working Papers 2005-13, University of Aarhus, Aarhus School of Business, Department of Management.
    16. Holm, Håkan, 2004. "Detection Biases in Bluffing - Theory and Experiments," Working Papers 2004:30, Lund University, Department of Economics, revised 19 Jan 2005.
    17. Heiner, Ronald Asher, 2002. "Robust Evolution Of Contingent Cooperation In Pure One-Shot Prisoners' Dilemmas. Part II: Evolutionary Dynamics & Testable Predictions," CSLE Discussion Paper Series 2002-10, Saarland University, CSLE - Center for the Study of Law and Economics.
    18. C. E. Jager, 2017. "A Question of Trust: the Pursuit of Consumer Trust in the Financial Sector by Means of EU Legislation," Journal of Consumer Policy, Springer, vol. 40(1), pages 25-49, March.
    19. Bruce Ian Carlin & Simon Gervais, 2009. "Work Ethic, Employment Contracts, and Firm Value," Journal of Finance, American Finance Association, vol. 64(2), pages 785-821, April.
    20. Ryan Murphy & Amnon Rapoport & James Parco, 2006. "The breakdown of cooperation in iterative real-time trust dilemmas," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 147-166, June.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_331. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.