Suppose there is a principal-agent relationship between employer and employee in which effort is not contractible, but is elicited through employer incentive mechanisms. We term preferences that allow the employer to elicit effort at lower cost incentive enhancing. We analyze how such...

Where genetically unrelated members of a group benefit from mutual adherence to a social norm, agents may obey the norm and punish its violators, even when this behavior cannot be justified in terms of self-regarding, outcome-oriented preferences. We call this strong reciprocity. We distinguish...

Monitoring by peers in work teams, credit associations, partner- ships, local commons situations, and residential neighborhoods is often an effective means of attenuating incentive problems. Most explanations of the incentives to engage in mutual monitoring rely either on small group size or on...

Networks such as ethnic credit associations, close-knit residential neighborhoods, "old boy' networks, and ethnically linked businesses play an important role in economic life but have been little studied by economists. These networks are often supported by cultural distinctions between insiders...

We propose an explanation of cooperation among unrelated members of a social group, in which providing group benefits evolves because it constitutes an honest signal of the member's quality as a mate, coalition partner or competitor, and therefore results in advantageous alliances for those...

Social capital generally refers to trust, concern for one's associates, a willingness to live by the norms of one's community and to punish those who do not. While essential to good governance, these behaviors and dispositions appear to conflict with the fundamental behavioral assumptions of...

Experimental behavioral scientists have found consistent deviations from the predictions of the canonical model of self-interest in over a hundred experiments from around the world. Prior research cannot determine whether this uniformity results from universal patterns of behavior, or from the...

A number of outstanding puzzles in economics may be resolved by recognizing that where members of a group benefit from mutual adherence to a social norm, agents may obey the norm and punish its violators, even when this behavior cannot be motivated by self-regarding, outcome-oriented...

The perpetuation of a family's position in the distribution of income from parents to children reflects the genetic and cultural transmission of individual traits, as well as the inheritance of group memberships and income-earning assets. We show that the extent of intergenerational economic...

Recent investigations have uncovered large, consistent deviations from the predictions of the textbook representation of Homo Economicus: in addition to their own material payoffs, many experimental subjects appear to care about fairness and reciprocity and reward those who act in a cooperative...