Shocks and Relationships
AbstractIn this paper we experimentally study effects of exogenous revenue shocks on long-term relationships between firms and workers. While we find that shocks have no significant effect on wages and a little effect on the duration of relationships, we observe their significant effect on effort levels: given the same wage, the workers exert lower effort in the condition with shocks than in the condition with no shocks. As a result, the presence of shocks in our experiment decreases market efficiency.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 09/07.
Length: 27 pages
Date of creation: 27 Apr 2009
Date of revision:
Contact details of provider:
Postal: Private Bag 4800, Christchurch, New Zealand
Phone: 64 3 364 2848 (Administrator)
Fax: 64 3 364 2635
Web page: http://www.econ.canterbury.ac.nz
More information through EDIRC
Experiment; exogenous revenue shocks; gift exchange;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gachter, Simon & Riedl, Arno, 2005.
"Moral property rights in bargaining with infeasible claims,"
Open Access publications from Maastricht University
urn:nbn:nl:ui:27-16453, Maastricht University.
- Simon Gächter & Arno Riedl, 2005. "Moral Property Rights in Bargaining with Infeasible Claims," Management Science, INFORMS, vol. 51(2), pages 249-263, February.
- Simon G�chter & Arno Riedl, 2003. "Moral Property Rights in Bargaining with Infeasible Claims," Tinbergen Institute Discussion Papers 03-055/1, Tinbergen Institute.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September.
- Martin Brown & Armin Falk & Ernst Fehr, 2004.
"Relational Contracts and the Nature of Market Interactions,"
Econometric Society, vol. 72(3), pages 747-780, 05.
- Brown, Martin & Falk, Armin & Fehr, Ernst, 2003. "Relational Contracts and the Nature of Market Interactions," IZA Discussion Papers 897, Institute for the Study of Labor (IZA).
- Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
- Ernst FEHR & Simon GÄCHTER & Georg KIRCHSTEIGER, 1994.
"Reciprocal Fairness and Noncompensating Wage Differentials,"
Vienna Economics Papers
vie9401, University of Vienna, Department of Economics.
- Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1996. "Reciprocal fairness and noncompensating wage differentials," ULB Institutional Repository 2013/5921, ULB -- Universite Libre de Bruxelles.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Albert Yee).
If references are entirely missing, you can add them using this form.