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Contracting Under Reciprocal Altruism

  • Shchetinin, Oleg

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

I show that a simple formal model of reciprocal altruism is able to predict human behavior in contracting situations, puzzling when considered within selfishness assumption. For instance, motivation and performance crowding-out are explained by a signaling mechanism in which provision of an extrinsic incentive signals non-generosity of the Principal and decreases Agent’s intrinsic motivation. The model’s equilibrium predicts behavior in the Control Game of Falk and Kosfeld and in a variant of Trust Game by Fehr and Rockenbach. This suggests that reciprocal altruism modeling could be fruitful more generally in applications of contract theory.

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File URL: http://hdl.handle.net/2077/21529
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 421.

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Length: 39 pages
Date of creation: 09 Dec 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0421
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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