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A Theory of Endogenous Sentiments


  • Laurence Kranich
  • Joan Esteban


We introduce a model in which agents' sentiments toward others are determined endogenously on the basis of how they perform relative to a standard of appropriate behavior. As sentiments change, so too does the optimal behavior of each individual, which in turn affects other agents' sentiments toward them. We focus on fixed points of this reciprocal adjustment process. To demonstrate the potential use and implications of such a model, we present an extended example involving team production. We consider various standards of behavior, and we examine stationary patterns of behavior and sentiments under each.

Suggested Citation

  • Laurence Kranich & Joan Esteban, 2002. "A Theory of Endogenous Sentiments," Discussion Papers 02-11, University at Albany, SUNY, Department of Economics.
  • Handle: RePEc:nya:albaec:02-11

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    References listed on IDEAS

    1. Dufwenberg, Martin & Kirchsteiger, Georg, 2004. "A theory of sequential reciprocity," Games and Economic Behavior, Elsevier, vol. 47(2), pages 268-298, May.
    2. Joan Esteban & Laurence Kranich, "undated". "Redistributive Taxation With Endogenous Sentiments," Working Papers 33-02 Classification-JEL , Instituto de Estudios Fiscales.
    3. Sethi, Rajiv & Somanathan, E., 2001. "Preference Evolution and Reciprocity," Journal of Economic Theory, Elsevier, vol. 97(2), pages 273-297, April.
    4. Gilboa, Itzhak & Schmeidler, David, 1988. "Information dependent games : Can common sense be common knowledge?," Economics Letters, Elsevier, vol. 27(3), pages 215-221.
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    Cited by:

    1. Joan Esteban & Laurence Kranich, 2003. "The Social Contracts with Endogenous Sentiments," Working Papers 71, Barcelona Graduate School of Economics.

    More about this item

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • D60 - Microeconomics - - Welfare Economics - - - General
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values


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