We study how social evaluation affects conformity and anticonformity in theory and in an experiment. In theory, we show that negative social evaluation, i.e., potential punishment, creates incentives for conformity. Positive social evaluation, i.e., potential reward, creates incentives for...

This paper presents a formal theory of reciprocity. Reciprocity means that people reward kind actions and punish unkind ones. The theory takes into account that people evaluate the kindness of an action not only by its consequences but also the intention underlying this action. The theory...

Field evidence suggests that agents belonging to the same group tend to behave similarly, i.e., behavior exhibits social interaction effects. Testing for such effects raises severe identification problems. We conduct an experiment that avoids these problems. The main design feature is that each...