Journal of Business Ethics 65 (4):309 - 323 (2006)

Steven Scalet
University of Baltimore
Prisoner's dilemmas can lead rational people to interact in ways that lead to persistent inefficiencies. These dilemmas create a problem for institutional designers to solve: devise institutions that realign individual incentives to achieve collectively rational outcomes. I will argue that we do not always want to eliminate misalignments between individual incentives and efficient outcomes. Sometimes we want to preserve prisoner's dilemmas, even when we know that they systematically will lead to inefficiencies. No doubt, prisoner's dilemmas can create problems, but they also create opportunities to practice the cooperative norms that make market institutions possible in the first place. An ethical market culture, I argue, benefits from the presence of prisoner's dilemmas. I first consider standard approaches for solving prisoner's dilemmas. I then argue for the value of prisoner's dilemmas. Finally, I show the significance of this argument for advocating codes of business ethics.
Keywords Business Ethics  Codes of Business Ethics  Cooperative Norms  Economics  Experimental Economics  Incentive Compatibility  Invisible Hand  The Market Culture  Prisoner Dilemmas  Public Goods
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DOI 10.1007/s10551-005-5356-x
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Morals by Agreement.David P. Gauthier - 1986 - Oxford University Press.

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CSR Rating Agencies: What is Their Global Impact?Steven Scalet & Thomas F. Kelly - 2010 - Journal of Business Ethics 94 (1):69-88.

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