How do institutions and fairness interact?

Experimental evidence is presented, showing that reciprocal fairness is an important force beyond rational selfishness, interacting in important ways with the institutional environment. On the other hand, the economic impact of reciprocity depends on the institutional environment: In competitive environments with complete contracts the impact is rather limited, whereas reciprocity is of great importance when contracts are incomplete. On the other hand, reciprocity influences the choice of institutions.