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A tractable model of reciprocity and fairness

2006; Elsevier BV; Volume: 59; Issue: 1 Linguagem: Inglês

10.1016/j.geb.2006.05.001

1090-2473

James C. Cox, Daniel Friedman, Steven Gjerstad,

Culture, Economy, and Development Studies

We introduce a parametric model of other-regarding preferences in which my emotional state determines the marginal rate of substitution between my own and others' payoffs, and thus my subsequent choices. In turn, my emotional state responds to relative status and to the kindness or unkindness of others' choices. Structural estimations of this model with six existing data sets demonstrate that other-regarding preferences depend on status, reciprocity, and perceived property rights.