Families, Markets and Self-Enforcing Reciprocity Norms

This paper studies the evolution of self-enforcing reciprocity norms in a developing economy with weak property rights. In the model, children are viewed as investments in old-age support. In order to increase support in their old age, parents attempt to instill preferences for reciprocity in their children. These educational investments create a nucleus of "reciprocators", inducing the remaining opportunistic types to mimic the reciprocators' behavior, in order to find partners in their market transactions.