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A Tractable Model of Reciprocity and Fairness
Cox, James ; Friedman, Daniel ; Gjerstad, Steven
Cox, James
Friedman, Daniel
Gjerstad, Steven
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Abstract
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.
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To learn more about the Andrew Young School of Policy Studies and ExCEN Working Papers Series, visit https://aysps.gsu.edu/ and http://excen.gsu.edu/center/.
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Date
2006-02-14
