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Beautiful Game Theory by Ignacio Palacios-Huerta

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7

FAVORITISM UNDER SOCIAL PRESSURE

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© TAWNG/STOCKFRESH

Last time we got a penalty away from home, Christ was still a carpenter.

—ROBIN M. LAWRENCE, CRYSTAL PALACE MANAGER 2012

SOCIAL ENVIRONMENTS INFLUENCE INDIVIDUAL BEHAVIOR. THIS IMPORTANT aspect has long been the focus of the literature on endogenous preference formation but only where convincing empirical tests are difficult to find. This chapter is concerned with the effect of nonmonetary incentives on behavior, in particular with the study of social pressure as a determinant of corruption. The analysis differs from extensive work in the literature on corruption both in the origin of the incentives ...

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