Reciprocity as a contract enforcement device: experimental evidence
Numerous experimental studies indicate that people tend to reciprocate favors and punish unfair behavior. It is hypothesized that these behavioral responses contribute to the enforcement of contracts and increase gains from trade. It turns out that, if only one side of the market has opportunities for reciprocal responses, the impact of reciprocity on contract enforcement depends on the details of the pecuniary incentive system. If both sides of the market have opportunities for reciprocal responses, robust and powerful reciprocity effects occur. In particular, reciprocal behavior causes a substantial increase in the set of enforceable actions and large efficiency gains.
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|Date of creation:||Jul 1997|
|Publication status:||Published in: Econometrica (1997) v.65 n° 4,p.833-860|
|Contact details of provider:|| Postal: CP135, 50, avenue F.D. Roosevelt, 1050 Bruxelles|
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- Sanford Grossman & Oliver Hart, .
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Rodney L. White Center for Financial Research Working Papers
15-80, Wharton School Rodney L. White Center for Financial Research.
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ULB Institutional Repository
2013/5927, ULB -- Universite Libre de Bruxelles.
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- repec:fth:prinin:345 is not listed on IDEAS
- Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
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