Can Contract Theory Explain Social Preferences - 1425 Words

Analytical Summary: Can Contract Theory Explain Social Preferences? One of the revolutionary changes in the economic thinking is taking into account the effect of social preferences on economic activities. During the last two decades, experimental economics showed that, social preferences play an important role on the economic activities. For example, Knack and Keefer (1997) proved that, trust and civic duty have important contribution to economic growth. Also, Slemrood (2003) find out that, real per capita income is higher in more trusting societies. Economists fail to understand fundamental economic questions when they disregard social preferences. Therefore, studies related to effect of social preferences on economy are highly important. In this regard, Macleod (2007) introduces the possibility of improvements of social preferences in a way that it will lead to a better economy. He assumes that fairness and trustworthiness plays an important role for contractual relations, which affects the economic activity. He shows in this article that, desired contractual activities could be achieved by improving fairness and trustworthiness of people. In his study, Macleod investigated the effect of social preferences on economic performance. As recent researchers suggest, for well functioning economy, there is lot of things to learn from psychology. In this respect, Macleod considers fairness and trust to be the most important factors for alleviating distortionary effects ofShow MoreRelatedEthics Course : The Trolley Problem1487 Words   |  6 Pagesthe best part about it was that we were not given a correct answer to the thought experiment. Now that the class is coming to an end, I will use the knowledge that I have gained from this class to come to an answer to this thought experiment and to explain how I arrived to it. The thought experiment that we were given is known as the â€Å"Trolley Problem† and it is split into two parts. In the first part of the problem we have an empty out of control trolley going down the rail track. If the trolley continuesRead MoreRational Choice Theory Of Criminal Behavior Essay1617 Words   |  7 Pagesthem pleasure and adrenaline. Criminal choices can be controlled by fear of punishment, but not all the time. The crime will be limited when the benefits are reduced and the costs increase. Rational choice theory is a perspective that holds criminality in the result of conscious choice. Not to mention, that it is predicted that individuals choose to commit crime when the benefits outweigh the costs of disobeying the law. In the rational choice theory, individuals are seen as motivated offenders byRead MoreRational Fools : A Critique Of The Behavioral Foundations Of Economic Theory1260 Words   |  6 PagesRational Fools: A Critique of the Behavioral Foundatio ns of Economic Theory written by economist, Amartya Sen, takes a look at behavioral self-interest and its relation to behavioral economics. At the time that this paper was written, behavioral economics was becoming a popular area to explore and economists were trying to figure out how they could apply their research to encourage human flourishing. Sen begins this paper by critiquing the work of Edgeworth, who claimed that the 1st principle ofRead MoreBusiness Ethics Essay1496 Words   |  6 Pagesdanger in response to the teasing, the teaser has a duty to rescue the other. ANSWER: D PAGE: 3-8 4. All of the following are considered exceptions to the general rule that there is no duty to rescue except: a. 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