EconPapers    
Economics at your fingertips  
 

Social Preferences and Competition

Klaus Schmidt ()

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: There is a general presumption that social preferences can be ignored if markets are competitive. Market experiments (Smith 1962) and recent theoretical results (Dufwenberg et al. 2008) suggest that competition forces people to behave as if they were purely self-interested. We qualify this view. Social preferences are irrelevant if and only if two conditions are met: separability of preferences and completeness of contracts. These conditions are often plausible, but they fail to hold when uncertainty is important (financial markets) or when incomplete contracts are traded (labor markets). Social preferences can explain many of the anomalies frequently observed on these markets.

Keywords: Social preferences; competition; separability; incomplete contracts; asset markets; labor markets (search for similar items in EconPapers)
JEL-codes: C9 D5 J0 (search for similar items in EconPapers)
Date: 2010-01
New Economics Papers: this item is included in nep-bec, nep-com, nep-exp and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://epub.ub.uni-muenchen.de/11313/1/Social_Pre ... 91231_DP_VERSION.pdf (application/pdf)

Related works:
Journal Article: Social Preferences and Competition (2011)
Working Paper: Social preferences and competition (2011)
Working Paper: Social Preferences and Competition (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:11313

Access Statistics for this paper

More papers in Discussion Papers in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg ().

 
Page updated 2025-03-31
Handle: RePEc:lmu:muenec:11313