Generous actors,selfish actions: markets with other-regarding preferences |
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| Authors: | Joel Sobel |
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| Institution: | (1) Department of Economics, University of California, La Jolla, San Diego, CA 92093, USA |
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| Abstract: | This paper points out that classical competitive outcomes arise in two different market environments even if agents have non-classical
preferences. Consumers with separable, other-regarding preferences behave as if they have classical preferences in competitive
equilibrium. These outcomes need not be efficient, but under plausible conditions will be efficient following a redistribution
of income. In simple double-auction environments competitive outcomes arise under a wide range of assumptions on preferences
even without assuming separability. I discuss the importance of the domain of definition of preferences and how the preferences
present in the economy influence the performance of the trading institution.
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| Keywords: | Markets Other-regarding preferences Rationality Self-interest Welfare theorems Bargaining Identification |
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