Skip to main content
    • Aa
    • Aa


  • Kaushik Basu (a1)

Much of economics is built on the assumption that individuals are driven by self-interest and economic development is an outcome of the free play of such individuals. On the few occasions that the existence of altruism is recognized in economics, the tendency is to build this from the axiom of individual selfishness. The aim of this paper is to break from this tradition and to treat as a primitive that individuals are endowed with the ‘cooperative spirit’, which allows them to work in their collective interest, even when that may not be in their self-interest. The paper tracks the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

G. Akerlof and R. Kranton 2000. Economics and identity. Quarterly Journal of Economics 115: 715753.

K. J. Arrow 1998. The place of institutions in the economy: a theoretical perspective. In The Institutional Foundations of East Asian Economic Development, ed. M. Aoki and Y. Hayami . Basingstoke: Macmillan.

S. Baliga and T. Sjostrom 2004. Arms races and negotiations. Review of Economic Studies 71: 351369.

K. Basu 2000. Prelude to Political Economy: A Study of the Social and Political Foundations of Economics. Oxford and New York: Oxford University Press.

K. Basu 2005. Racial conflict and the malignancy of identity. Journal of Economic Inequality 3.

K. Basu 2006. Gender and say: A model of household decision-making with endogenous balance of power. Economic Journal 116.

K. Basu 2007. Coercion, contract and the limits of the market. Social Choice and Welfare 29: 559579.

K. Basu 2008. Methodological individualism. In The New Palgrave Dictionary of Economic, L. Blume and S. Durlauf . New York: Palgrave.

R. Benabou and J. Tirole 2006. Incentives and prosocial behavior. American Economic Review 96: 16521679.

J. Bernard 1954. The theory of games of strategy as a modern sociology of conflict. American Sociological Review 59: 411424.

R. Blumberg and M. Coleman 1989. A theoretical look at the gender balance of power in the American couple. Journal of Family Issues 10: 225250.

W. A. Darity Jr., P. L. Mason and J. B. Stewart 2006. The economics of identity: The origin and persistence of racial identity norms. Journal of Economic Behavior and Organization 60: 283305.

T. Ellingsen and M. Johannesson 2008. Pride and prejudice: The human side of incentive theory. American Economic Review 98: 9901008.

J. Ensminger 2000. Experimental economics in the bush: How institutions matter. In Institutions and Organizations, ed. C. Menard . London: Edward Elgar.

E. Fehr and A. Falk 2002. Psychological foundations of incentives. European Economic Review 46: 687724.

E. Fehr and S. Gachter 2000. Cooperation and punishment in public goods experiments. American Economic Review 90: 980994.

C. Fershtman and U. Gneezy 2001. Discrimination in a segmented society: An experimental approach. Quarterly Journal of Economics 116: 351377.

P. Francois 2002. Social Capital and Economic Development. New York: Routledge.

R. H. Frank , T. Gilovich and D. T. Regan 1993. Does studying economics inhibit cooperation? Journal of Economic Perspectives 7: 159171.

H. Gans 1972. The positive functions of poverty. American Journal of Sociology 78: 275288.

M. W. Macy 1997. Identity, interest and emergent rationality: An evolutionary synthesis. Rationality and Society 9: 427448.

M. Granovetter 1985. Economic action and social structure: the problem of embeddedness. American Journal of Sociology 91: 481510.

E. Glaeser , D. Laibson , J. Scheinkman and C. Soutter 2000. Measuring trust. Quarterly Journal of Economics 115: 811846.

M. Granovetter and R. Soong 1983. Threshold models of diffusion and collective behavior. Journal of Mathematical Sociology 9: 165179.

J. Heinrich , R. Boyd , S. Bowles , C. Camerer , E. Fehr and H. Gintis 2004. Foundations of Human Sociality: Economic and Ethnographic Evidence from Fifteen Small-Scale Societies. Oxford: Oxford University Press.

S. Knack and P. Keefer 1997. Does social capital have an economy payoff? A cross-country investigation. Quarterly Journal of Economics 112: 12511288.

D. K. Levine 1998. Modeling altruism and spitefulness in experiments. Review of Economic Dynamics 1: 593622.

E. Luttmer 2001. Group loyalty and the taste for redistribution. Journal of Political Economy 109: 500528.

S. Medema 2009. The Hesitant Hand: Taming Self-Interest in the History of Ideas. Princeton, NJ: Princeton University Press.

L. Minkler 2004. Shirking and motivations in firms: Survey evidence on worker attitudes. International Journal of Industrial Organization 22: 863884.

P. Pettit 1993. The Common Mind: The Essay on Psychology, Society, and Politics. New York: Oxford University Press.

P. Pettit 2002. Rules, Reasons and Norms. Oxford: Clarendon Press.

A. Rubinstein 2006a. A skeptic's comment on the study of economics. Economic Journal 116: C1C9.

A. Sen 1983. Liberty and social choice. Journal of Philosophy 80: 528.

R. Sethi and E. Somanathan 2001. Preference evolution and reciprocity. Journal of Economic Theory 97: 273297.

R. Swedberg 2001. Sociology and Game Theory: Contemporary and historical perspectives. Theory and Society 30: 301335.

H. Tajfel 1974. Social identity and intergroup behavior. Social Science Information 13: 6593.

J. Weibull 2004. Testing Game Theory. In Advances in Understanding Strategic Behaviour: Game Theory, Experiments and Bounded Rationality, ed. S. Huck . London: Palgrave MacMillan.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
  • URL: /core/journals/economics-and-philosophy
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 2
Total number of PDF views: 37 *
Loading metrics...

Abstract views

Total abstract views: 237 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 20th September 2017. This data will be updated every 24 hours.