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Why Social Preferences Matter - The Impact of Non-Selfish Motives on Competition,

Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

A substantial number of people exhibit social preferences, which means they are not solely motivated by material self-interest but also care positively or negatively for the material payoffs of relevant reference agents. We show empirically that economists fail to understand fundamental economic...

Persistent link: https://www.econbiz.de/10005627810

Testing Theories of Fairness - Intentions Matter

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

Recently developed models of fairness can explain a wide variety of seemingly contradictory facts. The most controversial and yet unresolved issue in the modeling of fairness preferences concerns the behavioral relevance of fairness intentions. Intuitively, fairness intentions seem to play an...

Persistent link: https://www.econbiz.de/10005627833

On reputation: A microfoundation of contract enforcement and price rigidity

Fehr, Ernst; Brown, Martin; Zehnder, Christian - Institut für Volkswirtschaftslehre, … - 2008

We study the impact of reputational incentives in markets characterized by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the...

Persistent link: https://www.econbiz.de/10005627891

Markets Is Strong Reciprocity a Maladaptation? On the Evolutionary Foundations of Human Altruism

Fehr, Ernst; Henrich, Joseph - Institut für Volkswirtschaftslehre, …

In recent years a large number of experimental studies have documented the existence of strong reciprocity among humans …. Strong reciprocity means that people willingly repay gifts and punish the violation of cooperation and fairness norms even in … that ultimate theories of kin selection, reciprocal altruism, costly signaling and indirect reciprocity do not provide …

Persistent link: https://www.econbiz.de/10005627903

Fairness, Incentives and Contractual Incompleteness

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - Institut für Volkswirtschaftslehre, …

We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are concerned about fairness. Conversely, contracts that...

Persistent link: https://www.econbiz.de/10005627919

Do High Stakes and Competition Undermine Fairness? Evidence from Russia

Fehr, Ernst; Fischbacher, Urs; Tougareva, Elena - Institut für Volkswirtschaftslehre, …

This paper reports the results of a series of competitive labour market experiments in which subjects have the possibility to reciprocate favours. In the high stake condition subjects earned between two and three times their monthly income during the experiment. In the normal stake condition the...

Persistent link: https://www.econbiz.de/10005627948

On the Nature of Fair Behavior

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

This paper shows that identical offers in an ultimatum game generate systematically different rejection rates depending on the other offers that are available to the proposer. This result casts doubt on the consequentialist practice in economics to define the utility of an action solely in terms...

Persistent link: https://www.econbiz.de/10005627957

Fairness, Incentives, and Contractual Choices

Fehr, Ernst; Schmidt, Klaus M. - Institut für Volkswirtschaftslehre, …

This paper examines how the presence of a non-negligible fraction of reciprocally fair actors changes the provision of incentives through contracts. We provide experimental evidence that principals have a strong preference for less complete contracts although the standard self-interest model...

Persistent link: https://www.econbiz.de/10005627963

Psychological Foundations of Incentives

Fehr, Ernst; Falk, Armin - Institut für Volkswirtschaftslehre, …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations. Yet, they constrained their attention to a very narrow and empirically questionable view of human motivation. The purpose of this paper is to show that this narrow view of...

Persistent link: https://www.econbiz.de/10005627964

Driving Forces of Informal Sanctions

Falk, Armin; Fehr, Ernst; Fischbacher, Urs - Institut für Volkswirtschaftslehre, …

Informal sanctions are a major determinant of a society's social capital because they are key to the enforcement of implicit agreements and social norms. Yet, little is known about the driving forces behind informal sanctions. We systematically examine the determinants of informal sanctions by a...

Persistent link: https://www.econbiz.de/10005627991