| Abstract: | In neo-classical welfare economics efficiency and equity are strictly separated. The emergence of New Institutional Economics (NIE) broadens the perspective by focusing on the implications of opportunist behaviour. In NIE emphasis is put on institutional arrangements that improve efficiency. The introduction of opportunist behaviour points at the more general problem of cooperation. As can be illustrated by invoking the Prisoners' Dilemma, cooperation may improve efficiency. Therefore, social norms matter and the question arises how they evolve. Evolutionary game theory shows how economic success may change behavioural dispositions to honesty or dishonesty. On a less abstract level one can investigate whether or not the market system fosters nice social traits. Apart from the approach chosen, the main message is that economics and ethics are strongly intertwined. |
