Can Contract Theory Explain Social Preferences?
In this article the author examines what economics can derive from psychology in order to better understand positive behavioral traits in individuals such as honesty, fairness and trust. The author suggests that contract theory can be used to examine social preference and could possibly be adapted to improve the performance of markets. In the article the author demonstrates that contract theory can be used to form the basis of a theory of equality and that trustworthiness can promote an increase in cooperation in meeting contractual obligations between two parties.
