Abstract

I discuss recent work by Ernst Fehr and his collaborators on cooperation and reciprocity. (i) Their work demonstrates conclusively the reality and importance of non-self-interested motivations. (ii) It allows for a useful distinction between trust and blind trust. (iii) It points to a category of quasi-moral norms, distinct both from social norms and moral norms. (iv) It demonstrates how social interactions can generate irrational belief formation. (v) It shows the potential of punishment for sustaining social norms and for overcoming the second-order free rider problem as well as obstacles to group selection. (vi) It offers a provocative experimental basis for the ‘warm-glow’ explanation of altruistic behavior. I conclude by suggesting some experiments that might allow for further developments of the theory.