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The Journal of Law, Economics, and Organization V18 I2
© 2002 Oxford University Press

Original Article

Two Economic Applications of Sympathy

David Sally

Cornell University

Abstract

The notion of sympathy is analyzed in the setting of coordination between duopolists and in the setting of the sale of a used car of possibly low quality. In both cases, the analysis suggests a number of empirical regularities concerning the effects of social interaction, physical distance, and psychological affinity. These regularities are confirmed by various historical accounts of collusion and by national survey results on used car purchases.


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