Journal of Business Ethics

, Volume 65, Issue 4, pp 309–323 | Cite as

Prisoner’s Dilemmas, Cooperative Norms, and Codes of Business Ethics

  • Steven Scalet


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.


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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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Philosophy DepartmentBinghamton University, State University of New YorkBinghamtonU.S.A.

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