A Theory of Fairness, Competition, and Cooperation

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ID: 289196
1999
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Abstract
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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openalex_W3022808291 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Ernst Fehr, Klaus M. Schmidt
Journal the quarterly journal of economics
Year 1999
DOI
10.1162/003355399556151
URL
Keywords Keywords not found

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