Working paper

Contracting under Reciprocal Altruism

Oleg Shchetinin


I develop a model of reciprocal altruism which accounts for some evidence in contracting situations, which are paradoxical from the point of view of neoclassical contract theory with selfish actors. My model predicts the crowding-out effect, observed in the Trust Game with the possibility of a fine; for the Control Game the model predicts that an equilibrium can exhibit ”no effect of control”, ”hidden cost of control”, or ”positive effect of control”, depending on the characteristics of the actors, as observed in the experiments. This suggests that reciprocal altruism modeling could be fruitful more generally in applications of contract theory.


contract theory; signaling; behavioral economics;

JEL codes

  • D82: Asymmetric and Private Information • Mechanism Design
  • M54: Labor Management


Oleg Shchetinin, Contracting under Reciprocal Altruism, TSE Working Paper, n. 09-078, August 2009.

See also

Published in

TSE Working Paper, n. 09-078, August 2009