Minimally Acceptable Altruism and the Ultimatum Game

Rotemberg, Julio J.

doi:10.2139/ssrn.917196

Cited by 35 publications

(37 citation statements)

References 43 publications

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“…One justification is that the public dislikes the existence of "unearned" income, or dishonest income, which arises with bribes (this would be similar to Alesina and Angeletos (2005b), where society dislikes differences in income arising due to luck), and therefore would like to punish those responsible for corruption. 21 An alternative justification is that the public dislikes bribes because of reciprocal altruism (see Levine 1998 andRotemberg 2008): the public dislikes income in the hands of those that have behaved unaltruistically towards them and bribes are one indicator of such low degree of altruism. 22 By reducing the income of those deemed unaltruistic through taxes, the public's utility increases.…”

Section: A Model Of the Demand For Public-private Sector Meetings Andmentioning

confidence: 99%

Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation

2016

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We analyze the role of people's beliefs about the rich in the determination of public policy in the context of a randomized online survey experiment. A question we study is the desirability of government-private sector meetings, a variable we argue is connected to State capacity. Survey respondents primed with negative views about business leaders want fewer meetings, as well as higher taxes to the top 1% and more regulation. We also study how these effects change when subjects are (additionally) primed with positive/negative views about government officials. Distrust in the government increases the preferred tax rate on the top 1% only when business legitimacy is low. A model with multiple equilibria helps interpret these findings. In one of the equilibria, meetings are allowed, business legitimacy is high, and people set a low income tax rate for businesspeople. In the other, meetings are forbidden, business legitimacy is low, and people set high taxes to punish the businesspeople for their corrupt behavior.

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Section: A Model Of the Demand For Public-private Sector Meetings Andmentioning

confidence: 99%

Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation

2016

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“…Second, this empirical tendency towards fairness can easily be accommodated in formal models. Models where individuals respond "like with like" and the process of detecting the amount of altruism in the other party occupies center stage (which seems particularly relevant in dispensing justice) include Levine (1998) and Rotemberg (2003). Similarly, in our theory punishment occurs because voters want to harm criminals who display low levels of benevolence towards others.…”

Section: Introductionmentioning

confidence: 95%

Crime and punishment in the “American Dream”

Tella¹,

Dubra

2008

Journal of Public Economics

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We observe that countries where belief in the "American dream"(i.e., effort pays) prevails also set harsher punishment for criminals. We know that beliefs are also correlated with several features of the economic system (taxation, social insurance, etc). Our objective is to study the joint determination of these three features (beliefs, punitiveness and economic system) in a way that replicates the observed empirical patterns. We present a model where beliefs determine the types of contracts that firms offer and whether workers exert effort. Some workers become criminals, depending on their luck in the labor market, the expected punishment, and an individual shock that we call "meanness". It is this meanness level that a penal system based on "retribution" tries to detect when deciding the severity of the punishment. We find that when initial beliefs differ, two equilibria can emerge out of identical fundamentals. In the "American" (as opposed to the "French") equilibrium, belief in the "American dream" is commonplace, workers exert effort, there are high powered contracts (and income is unequally distributed) and punishments are harsh. Economists who believe that deterrence (rather than retribution) shapes punishment can interpret the meanness parameter as pessimism about future economic opportunities and verify that two similar equilibria emerge.

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“…As in Rotemberg (2008Rotemberg ( , 2010, consumer j's utility U j depends on his material payoffs x j , on the material payoffs of the firm he purchases from π, on his altruism towards the firm a j and on his assessment of the extent to which the firm acts altruistically towards him. In particular…”

Section: The Old Goodmentioning

confidence: 99%

“…Consumers do not learn this quality until after they purchase the good in period 1. In period 2, this new good is available for sale once again.This timing is illustrated in Table 1.As in Rotemberg (2008Rotemberg ( , 2010, consumer j's utility U j depends on his material payoffs x j , on the material payoffs of the firm he purchases from π, on his altruism towards the firm a j and on his assessment of the extent to which the firm acts altruistically towards him. In particular…”

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confidence: 94%

Quality Provision, Expected Firm Altruism and Brand Extensions

Rotemberg

2010

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This paper studies quality choice in a model where consumers expect firms (or brands) to act altruistically. Under plausible assumptions regarding this altruism and the reaction of consumers to firms that demonstrate insufficient altruism, existing brands can face a larger demand for new products than new entrants. Moreover, the failure of new products can reduce the demand for a brand's existing products even if the quality of these existing products is well understood by consumers. The model provides an interpretation for the dependence of the success of brand extensions on the ``fit" between the original product and the extension. The model can also explain why a ``high-end" brand that is expected to care only for its most quality sensitive customers can have an advantage in introducing a product relative to a brand that is expected to be more widely altruistic.Julio J. Rotemberg Graduate School of Business Harvard University, Morgan Hall Soldiers Field Boston, MA 02163 and NBER jrotemberg@hbs.eduWhile there exists an extensive theoretical literature on quality provision, the role of altruism from firms to consumers in the supply of quality appears to have been completely neglected. This paper seeks to fill this gap. It should be intuitive that this kind of altruism can contribute to quality in the case of experience goods, where consumers only learn the quality of the good after purchasing it. Managers (and employees) of altruistic firms obtain vicarious benefits when consumers have a good experience after buying their goods. The result is that, relative to selfish firms, they have more to gain from from providing a good of higher quality.The literature's neglect of this straightforward mechanism of quality enhancement may be due to skepticism about the relevance of altruism on the part of firms. It is worth noting, however, that firms's mission statements routinely assert their desire to serve customers. 1Consumers also appear to expect some suppliers to care for them, as evidenced by their reactions when companies disappoint them. Fournier (1998, p. 355) discusses a consumer she calls "Karen" who, recollecting a design change Mary Kay Cosmetics said: "I remember feeling, 'how could they do that to me?'." Similarly, the price cut of Apple's iPhone in 2007 led one customer to describe his reaction as "a feeling of betrayal of trust by a corporation I adored." 2 Consumers know firms principally through their brands, and this paper tries to analyze some sources and some consequences of consumer's expectations regarding brand altruism.Since altruistic firms provide higher quality goods, a consumer who is impressed by the quality of her purchase should come to expect more altruism towards her from the brand under which this good is sold. As a result, she should expect high quality when this brand launches a new good ("a brand extension") that is also directed at her. This raises the demand for brand extensions, and this effect should be particularly strong when, as in Rotemberg (2010), consumers become a...

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Minimally Acceptable Altruism and the Ultimatum Game

Cited by 35 publications

References 43 publications

Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation

Meet the Oligarchs: Business Legitimacy, State Capacity and Taxation

Crime and punishment in the “American Dream”

Quality Provision, Expected Firm Altruism and Brand Extensions

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