A Tractable Model of Reciprocity and Fairness

James C. Cox, Daniel Friedman () and Steven Gjerstad ()

No 2006-05, Experimental Economics Center Working Paper Series from Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University

Abstract: We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.

Date: 2006-02
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Related works:
Working Paper: A Trackable Model of Reciprocity and Fairness (2006)
Working Paper: A Tractable Model of Reciprocity and Fairness (2004)
Journal Article: A tractable model of reciprocity and fairness (2007)
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