We study infinitely repeated two-player games with perfect monitoring and assume that each period consists of two stages: one in which the players simultaneously choose an action and one in which they can transfer money to each other. In the first part of the paper, we derive simple conditions...

The article investigates social interaction among individuals who differ in their privately known motivation to comply with moral norms that are collectively rational in the sense that they maximize welfare given the distribution of moral motivation in the society. This yields tractable models...