The Economics of Reciprocity: Evidence and Theory

Armin Falk and Urs Fischbacher

Chapter 9 in Inequality Around the World, 2002, pp 207-233 from Palgrave Macmillan

Abstract: Abstract In many social sciences, particularly in economics, a fundamental assumption is that people are rational and selfish. According to this assumption people maximize their material well-being and ignore the well-being of others. In this chapter, we question the omnipresence of the homo economicus as assumed by conventional economic theory. We review empirical evidence, which impressively suggests that reciprocity is a powerful determinant of human behaviour. Moreover, we demonstrate that reciprocity can fruitfully be incorporated into game theory and economic modelling in general. With our model it is possible to formalize the concept of reciprocity and to organize the empirical evidence.

Keywords: Ultimatum Game; Public Good Game; Acceptance Probability; Wage Rigidity; Reciprocal Altruism (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-137-09971-6_9

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DOI: 10.1007/978-1-137-09971-6_9

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