Social Preferences and Competition

Arbeitspapier

There is a general presumption that social preferences can be ignored if markets are competitive. Market experiments (Smith 1962) and recent theoretical results (Dufwenberg et al. 2008) suggest that competition forces people to behave as if they were purely self-interested. We qualify this view. Social preferences are irrelevant if and only if two conditions are met: separability of preferences and completeness of contracts. These conditions are often plausible, but they fail to hold when uncertainty is important (financial markets) or when incomplete contracts are traded (labor markets). Social preferences can explain many of the anomalies frequently observed on these markets.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 298

Classification and Topics

• Classification: Wirtschaft
• Subject: Social preferences ; competition ; separability ; incomplete contracts ; asset markets ; labor markets ; Soziale Wohlfahrtsfunktion ; Wettbewerb ; Marktmechanismus ; Risiko ; Unvollständiger Vertrag ; Finanzmarkt ; Arbeitsmarkt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmidt, Klaus M.
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2009

Further information

• DOI: doi:10.5282/ubm/epub.13256
• Handle: http://hdl.handle.net/10419/94140
• URN: urn:nbn:de:bvb:19-epub-13256-1
• Last update: 10.03.2025, 11:45 AM CET