Lecture10

RECIPROCITY:

If people do not maximize utilities, then HOW do they behave? ONE very important element of human behavior is reciprocity. This will be studied in some detail in this lecture.

The main reading is:

"Fairness and Retaliation: The Economics of Reciprocity" by Ernst Fehr and Simon Gachter

In the actual lecture, we covered the first few sections of the article above, and did not get to the article below, which is discussed in section entitled:

Reciprocity as Contract Enforcement device. So this will now be the start of next lecture.

Addtional Reading to be discussed is:

Reciprocity as a Contract Enforcement Device: Experimental Evidence

Author(s): Ernst Fehr, Simon Gächter, Georg KirchsteigerReviewed work(s):Source: Econometrica, Vol. 65, No. 4 (Jul., 1997), pp. 833-860

Model paper is also attached below.