Self-interest and social preferences

5 important questions on Self-interest and social preferences

Defense of cosumerism (self-interest)

·Positive grounds: it leads to reasonable empirical predictions
·Normative grounds: self-interest leads to socially good outcomes

Two persons you divide yourself in

- spectator
- agent

Das Smith Problem (Etzioni)

In the Theory of Moral Sentiments Smith observes that people sympathize with other people, whereas I The wealth of Nations man seems to be driven by self-interes
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Prisoner's dilemma, 2 interesting characteristics (Sen)

·Outcome is not only Pareto-inferior, but result is independent of                         individual’s expectation about the action of the other agent.
·Need for enforcement

Coordination if individual and common goals are not perfectly aligned and if information is imperfect

·Explicit legal contracts
·Reputation mechanism
·Implicit (relational) contracts: depends on trust between both parties. 

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