IDEAS home Printed from https://ideas.repec.org/a/aea/aejmic/v7y2015i1p70-98.html
   My bibliography  Save this article

Distributional Preferences, Reciprocity-Like Behavior, and Efficiency in Bilateral Exchange

Author

Listed:
  • Daniel J. Benjamin

Abstract

Under what conditions do distributional preferences, such as altruism or a concern for fair outcomes, generate efficient trade? I analyze theoretically a simple bilateral exchange game: each player sequentially takes an action that reduces his own material payoff but increases the other player's. Each player's preferences may depend on both his/her own material payoff and the other player's. I identify two key properties of the second-mover's preferences: indifference curves kinked around "fair" material-payoff distributions, and materials payoffs entering preferences as "normal goods". Either property can drive reciprocity-like behavior and generate a Pareto efficient outcome. (JEL C78, D63, D64)

Suggested Citation

  • Daniel J. Benjamin, 2015. "Distributional Preferences, Reciprocity-Like Behavior, and Efficiency in Bilateral Exchange," American Economic Journal: Microeconomics, American Economic Association, vol. 7(1), pages 70-98, February.
    • Handle: RePEc:aea:aejmic:v:7:y:2015:i:1:p:70-98
    Note: DOI: 10.1257/mic.20120109
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.20120109
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/mic/ds/0701/2012-0109_ds.zip
    Download Restriction: no
    File URL: http://www.aeaweb.org/aej/mic/app/0701/2012-0109_app.pdf
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wolfgang Buchholz & Todd Sandler, 2017. "Successful Leadership in Global Public Good Provision: Incorporating Behavioural Approaches," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 591-607, July.
    2. Castillo, Marco E. & Cross, Philip J. & Freer, Mikhail, 2019. "Nonparametric utility theory in strategic settings: Revealing preferences and beliefs from proposal–response games," Games and Economic Behavior, Elsevier, vol. 115(C), pages 60-82.
    3. Emel Filiz-Ozbay & John C. Ham & John H. Kagel & Erkut Y. Ozbay, 2018. "The role of cognitive ability and personality traits for men and women in gift exchange outcomes," Experimental Economics, Springer;Economic Science Association, vol. 21(3), pages 650-672, September.
    4. Daniel J. Benjamin, 2015. "A Theory of Fairness in Labour Markets," The Japanese Economic Review, Japanese Economic Association, vol. 66(2), pages 182-225, June.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejmic:v:7:y:2015:i:1:p:70-98. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.