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Gift exchange and the separation of ownership and control

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  • Maximiano, Sandra
  • Sloof, Randolph
  • Sonnemans, Joep

Abstract

Numerous gift-exchange experiments have found a positive wage–effort relationship. In (almost) all these experiments the employer both owns and controls the firm. This paper explores to what extent the separation of ownership and control affects the wage–effort relationship. We compare the standard bilateral gift-exchange game between an owner-manager and a worker with two trilateral ones where the firm is owned by a shareholder and controlled by a manager. The wage–effort relationship is similar in all three situations. Most strikingly, workers reward higher wages with higher effort, even when the manager does not share in the firmʼs profits.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 77 (2013)
Issue (Month): 1 ()
Pages: 41-60

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Handle: RePEc:eee:gamebe:v:77:y:2013:i:1:p:41-60

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Gift exchange; Reciprocity; Ownership; Control;

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Citations

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Cited by:
  1. Dur, Robert & Roelfsema, Hein, 2010. "Social exchange and common agency in organizations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 55-63, January.
  2. Casoria Fortuna & Riedl Arno, 2012. "Experimental labor markets and policy considerations: Incomplete contracts and macroeconomic aspects," Research Memorandum 058, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  3. Liang, Pinghan & Meng, Juanjuan, 2013. "Love me, love my dog: an experimental study on social connections and indirect reciprocity," MPRA Paper 45270, University Library of Munich, Germany.

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