Permanent URL to this publication: http://dx.doi.org/10.5167/uzh-51823
Fehr, Ernst; Schmidt, Klaus M (1999). A Theory of Fairness, Competition and Cooperation. Working paper series / Institute for Empirical Research in Economics No. 4, University of Zurich.
There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free-riders, stable cooperation is maintained although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.
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|Item Type:||Working Paper|
|Communities & Collections:||03 Faculty of Economics > Department of Economics
Working Paper Series > Institute for Empirical Research in Economics (former)
|Dewey Decimal Classification:||330 Economics|
|Deposited On:||29 Nov 2011 19:45|
|Last Modified:||09 Jul 2012 05:01|
|Series Name:||Working paper series / Institute for Empirical Research in Economics|
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