Saturday, 22 November 2008

Ernst Fehr and Simon Gachter(2000)”Fairness and Retaliation: The Economics of Reciprocity”


The aim of the paper is to explain reciprocity, a situation in which two people, groups, or countries give each other similar kinds of help or special rights. Fundamentally, economics expects selfish individuals and they can reach efficient situation in the long run. However, the authors think individuals differently; fairness, and reciprocity, and explain real situation through experiments in laboratories.

The view of reward is more effective than punishment even if it is same in economics is interesting. And the facts that fairness or incomplete constrain is preferable than selfish and complete are also interesting. But I think they can be explain profit maximization in the long term. The result of the paper is interesting for importance of system, but not so interesting for another aspect of human preference, I think.

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