Not logged in.

Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title A Theory of Fairness, Competition and Cooperation
Organization Unit
  • Ernst Fehr
  • Klaus M Schmidt
  • English
Institution University of Zurich
Series Name Working paper series / Institute for Empirical Research in Economics
Number No. 4
ISSN 1424-0459
Date 1999
Abstract Text 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.
Official URL
PDF File Download from ZORA
Export BibTeX