Table of Contents

Handbook on the Economics of Reciprocity and Social Enterprise

Handbook on the Economics of Reciprocity and Social Enterprise

Elgar original reference

Edited by Luigino Bruni and Stefano Zamagni

The recent era of economic turbulence has generated a growing enthusiasm for an increase in new and original economic insights based around the concepts of reciprocity and social enterprise. This stimulating and thought-provoking Handbook not only encourages and supports this growth, but also emphasises and expands upon new topics and issues within the economics discourse.

Chapter 2: Altruistic reciprocity

Herbert Gintis

Subjects: economics and finance, behavioural and experimental economics, economic psychology, public sector economics, politics and public policy, social entrepreneurship, social policy and sociology, economics of social policy


By a self-regarding actor we mean an individual who maximizes his own payoff in social interactions. A self-regarding actor thus cares about the behavior of and payoffs to the other individuals only insofar as these impact his own payoff. The term ‘self-regarding’ is more accurate than ‘self-interested’ because an other-regarding individual is still acting to maximize utility and so can be described as self-interested. For instance, if I get great pleasure from your consumption, my gift to you may be self-interested, even though it is surely other-regarding. We can avoid confusion (and much pseudo-philosophical discussion) by employing the self-regarding/ other-regarding terminology. One major result of behavioral game theory is that when modeling market processes with well-specified contracts, such as double auctions (supply and demand) and oligopoly, game-theoretic predictions assuming self-regarding actors are accurate under a wide variety of social settings (see Kachelmaier and Shehata, 1992; Davis and Holt, 1993). The fact that self-regarding behavior explains market dynamics lends credence to the practice in neoclassical economics of assuming that individuals are self-regarding. However, it by no means justifies ‘Homo economicus’ because many economic transactions do not involve anonymous exchange.

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