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Contracting Under Reciprocal Altruism

  • Shchetinin, Oleg

I develop a model of contracting under reciprocal altruism accounting for some evidence which is paradoxical from the point of view of neoclassical models with selfish actors. My model predicts the crowding-out effect observed in the Trust Game with the possibility of a fine; for the Control Game the model predicts that an equilibrium can exhibit "no effect of control", "hidden cost of control", or "positive effect of control", depending on the characteristics of the actors, as observed in the lab. This suggests that reciprocal altruism modeling could be fruitful more generally in applications of contract theory.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13457.

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Date of creation: 16 Feb 2009
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Handle: RePEc:pra:mprapa:13457
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