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Soft transactions

Thomas Jeitschko () and Chilei Lau ()

Journal of Economic Behavior & Organization, 2017, vol. 141, issue C, 122-134

Abstract: This paper considers “soft debt” as a social convention that facilitates long-term reciprocal relationships. A player is said to follow a soft debt strategy if his decisions depend on the entire history with his counterpart only through their accrued soft debt balance. Under discrete benefits, there exist equilibria in which the players keep reciprocating as long as the debt balance does not exceed a certain limit.

Keywords: Social interactions; Reciprocity; Soft debt; Soft transaction; Favor-trading (search for similar items in EconPapers)
JEL-codes: C73 (search for similar items in EconPapers)
Date: 2017
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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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