This paper seeks to understand what motivates workers to be altruistic toward one another and studies whether firms benefit from encouraging these "human relations" in the workplace. The paper first proposes that feelings of altruism can be individually rational in certain settings in which the variables controlled by the workers are strategically linked. The paper then studies what this implies for equilibrium altruism in two situations. The first has workers who are paid as a function of joint output. The second is the relationship between subordinates and their supervisors.

In a recent issue of this Journal, Carr and Mathewson (1988) test a model of the impact of limited and unlimited liability regimes on the nature of firms by comparing the performance of law firms operated as partnerships and sole proprietorships (and therefore subject to unlimited liability) with that of law firms operated as corporations (and therefore subject to limited liability).' In their model, "unlimited liability by raising the cost of ownership rights discourages investment in the firm, causing legal firms to be inefficiently small" (p. 779). The peculiar history of organizational form in the legal profession seemed to provide an opportunity to test their model's prediction. Prior to the 1960s, state law prevented law firms from incorporating, with the effect that unlimited liability was mandated. During the 1960s and early 1970s, a large number of states passed statutes that allowed law and other professional service firms to incorporate, thereby giving such firms the option to elect either an unlimited or a limited liability regime. The result was a universe that included some law firms that were subject to unlimited liability and some that were subject to limited liability.

Digitised version produced by the EUI Library and made available online in 2020.

It has often been argued that prices are sticky in the United States. However, the empirical papers that have claimed to support this view have not reflected any formal behavioral theory. This paper presents a theory that justifies price stickiness, namely, that firms, fearing to upset their customers, attribute a cost to price changes. The rational expectations equilibrium of an economy with many such firms is presented, estimated with postwar U.S. data, and tested against alternative hypotheses. The results largely support the model. Furthermore, the hypothesis that prices are not sticky is rejected by U.S. data.

This study presents new estimates of consumption functions based on aggregate U.S. time-series data. The results are striking: a variety of functional forms, estimation methods, and definitions of the real after-tax rate of return invariably lead to the conclusion of a substantial interest elasticity of saving. The implications of this result for the analysis of the efficiency and equity of the current U.S. tax treatment of income from capital are explored. In reducing the real net rate of return, current tax treatment significantly retards capital accumulation. This in turn causes an enormous waste of resources and redistributes a substantial fraction of gross income from labor to capital. Rough estimates of the loss welfare exceed 50 billion per year (a present value close to 1 trillion!) and of the redistribution from labor to capital exceed one-seventh of the capital's share of gross Income.It also suggests that the usual calculations of tax burdens by income class substantially overestimate both the progressivity of the income tax and the alleged regressivity of consumption taxes.

In the history of science researchers have often borrowed theories, analogies, or metaphors from other fields, usually the better-developed ones; in economic terms, they invested their human capital by acquiring new and presumably more-advanced intellectual tools.The most conspicuous borrowing in nineteenth-century social science was the unfortunately imaginary set of the developmental sequences of societies, worked out by anthropology and sociology on the basis of findings from biological evolution.It is less often that scientists in a relatively developed