Fairness and Retaliation: The Economics of Reciprocity

Ernst Fehr and Simon Gächter

Journal of Economic Perspectives, 2000, vol. 14, issue 3, 159-181

Abstract: This paper shows that reciprocity has powerful implications for many economic domains. It is an important determinant in the enforcement of contracts and social norms and enhances the possibilities of collective action greatly. Reciprocity may render the provision of explicit incentive inefficient because the incentives may crowd out voluntary co-operation. It strongly limits the effects of competition in markets with incomplete contracts and gives rise to noncompetitive wage differences. Finally, reciprocity it is also a strong force contributing to the existence of incomplete contracts.

JEL-codes: D12 D63 Z13 (search for similar items in EconPapers)
Date: 2000
Note: DOI: 10.1257/jep.14.3.159
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Citations: View citations in EconPapers (1342)

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Working Paper: Fairness and Retaliation: The Economics of Reciprocity (2000)
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