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A Tractable Model of Reciprocity and Fairness

  • James Cox

    (University of Arizona)

  • Daniel Friedman

    (University of California, Santa Cruz)

  • Steven Gjerstad

    (University of Arizona)

We introduce a parametric model of other-regarding preferences. The income distribution and the kindness or unkindness of others' choices ('intentions') systematically affect a person's emotional state. The emotional state systematically affects the marginal rate of substitution between own and others' payoffs, and thus the person's subsequent choices. The model is applied to two sets of laboratory data: simple binary choice mini-ultimatum games, and Stackelberg duopoly games with a range of choices. The results confirm that other-regarding preferences respond to others' intentions as well as to the income distribution.

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File URL: http://econwpa.repec.org/eps/exp/papers/0406/0406001.pdf
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Paper provided by EconWPA in its series Experimental with number 0406001.

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Length: 33 pages
Date of creation: 08 Jun 2004
Handle: RePEc:wpa:wuwpex:0406001
Note: Type of Document - pdf; pages: 33
Contact details of provider: Web page: http://econwpa.repec.org

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