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American Economic Review: Vol. 90 No. 1 (March 2000)
AER Volume. 90, Issue 1 | 
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ERC: A Theory of Equity, Reciprocity, and Competition
Article Citation
Bolton, Gary E., and
Axel Ockenfels. 2000. "ERC: A Theory of Equity, Reciprocity, and Competition."
American Economic Review,
90(1): 166-193.
DOI: 10.1257/aer.90.1.166
DOI: 10.1257/aer.90.1.166
Abstract
We demonstrate that a simple model, constructed on the premise that people are motivated by both their pecuniary payoff and their relative payoff standing, organizes a large and seemingly disparate set of laboratory observations as one consistent pattern. The model is incomplete information but nevertheless posed entirely in terms of directly observable variables. The model explains observations from games where equity is thought to be a factor, such as ultimatum and dictator, games where reciprocity is thought to play a role, such as the prisoner's dilemma and gift exchange, and games where competitive behavior is observed, such as Bertrand markets.
Article Full-Text Access
Full-text Article
Authors
Bolton, Gary E. (PA State U)
Ockenfels, Axel (U Magdeburg)
Ockenfels, Axel (U Magdeburg)
JEL Classifications
D63: Equity, Justice, Inequality, and Other Normative Criteria and Measurement
C78: Bargaining Theory; Matching Theory
C78: Bargaining Theory; Matching Theory
