Cited by 11,264Experimental Behavioral Economics StudiesGame Theory and Voting SystemsEvolutionary Game Theory and Cooperation

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A Theory of Fairness, Competition, and Cooperation

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Fehr, E., Schmidt, K. M.·1999·The Quarterly Journal of Economics

Abstract

There is strong evidence that people exploit their bargaining power in competitive markets but not in bilateral bargaining situations. There is also strong evidence that people exploit free-riding opportunities in voluntary cooperation games. Yet, when they are given the opportunity to punish free riders, stable cooperation is maintained, although punishment is costly for those who punish. This paper asks whether there is a simple common principle that can explain this puzzling evidence. We show that if some people care about equity the puzzles can be resolved. It turns out that the economic environment determines whether the fair types or the selfish types dominate equilibrium behavior.

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Crossref · 10.1162/003355399556151

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Research works printed but not linked: 33

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Metadata

Authors
Fehr, E., & Schmidt, K. M.
Affiliations
  • University of Zurich (CH)
  • Ludwig-Maximilians-Universität München (DE)
Venue
The Quarterly Journal of Economics
Published
1999-08-01
Volume
114
Issue
3
Pages
817-868
ISSN
  • 0033-5533 (ISSN-L)
  • 1531-4650
OpenAlex
W3022808291
Cited by
11,264
References
77
Citations by year
2026: 384 · 2025: 565 · 2024: 457 · 2023: 431 · 2022: 477 · 2021: 610 · 2020: 569 · 2019: 586 · 2018: 549 · 2017: 485 · 2016: 495 · 2015: 558 · 2014: 537 · 2013: 583 · 2012: 585
FWCI
445.30
Type
journal article
Language
en
Open access
Locations
  • The Quarterly Journal of Economics (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • HighWire Press Open Archive (submittedVersion)
  • Zurich Open Repository and Archive (University of Zurich) (submittedVersion, other-oa)
Funders
  • National Science Foundation
  • John D. and Catherine T. MacArthur Foundation
  • Massachusetts Institute of Technology
  • Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung (119614)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Experimental Behavioral Economics Studies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Game Theory and Voting Systems
  • Social Sciences › Sociology and Political Science › Evolutionary Game Theory and Cooperation
Keywords
fairness, equity, competition, cooperation, free-riding, punishment, bargaining power, voluntary cooperation, equilibrium selection, costly punishment

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