Economics and Finance Faculty Publications and Presentations

The reciprocity set

Document Type

Article

Publication Date

6-2024

Abstract

We consider the problem of designing procedures that guarantee policy stability, efficiency, and inclusiveness. For this purpose, we introduce a sequential protocol that embeds clauses granting agents the right to oppose actions not in their interest, retract actions that face opposition, and punish harmful actions. Our analysis shows that coalitional farsighted behaviors under this procedure lead to reciprocal actions. We then introduce a solution concept–the reciprocity set–to predict stable outcomes for effectivity function games. We find that under some conditions, the reciprocity set (1) is always non-empty; (2) only selects efficient outcomes; (3) strategically protects minority outcomes; and (4) is compatible with classical notions of fairness and Rawlsian justice in distributive problems.

Comments

Original published version available at https://doi.org/10.1016/j.jmateco.2024.102980

Publication Title

Journal of Mathematical Economics

DOI

10.1016/j.jmateco.2024.102980

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