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Managerial Payoff and Gift Exchange in the Field

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  • Florian Englmaier
  • Stephen G. Leider

Abstract

We conduct a field experiment where we vary both the presence of a gift exchange wage and the effect of the worker’s effort on the manager’s payoff. The results indicate a strong complementarity between the initial wage gift and the agent’s ability to “repay the gift”. We collect information on ability to control for differences and on reciprocal inclination to show that gift exchange is more effective with more reciprocal agents. We present a simple principal-agent model with reciprocal subjects that motivates our empirical findings. Our results offer an avenue to reconcile the recent conflicting evidence on the efficacy of gift exchange outside the lab; we suggest that the significance of gift exchange relations depends on details of the environment.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3707.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3707

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Related research

Keywords: incentives; reciprocity; gift exchange; field experiments;

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References

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  1. Georg Kirchsteiger & Martin Dufwenberg, 2004. "A theory of sequential reciprocity," ULB Institutional Repository 2013/5899, ULB -- Universite Libre de Bruxelles.
  2. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2013. "Do Wage Cuts Damage Work Morale? Evidence From A Natural Field Experiment," Journal of the European Economic Association, European Economic Association, European Economic Association, vol. 11(4), pages 853-870, 08.
  3. Grossman, Sanford J & Hart, Oliver D, 1983. "An Analysis of the Principal-Agent Problem," Econometrica, Econometric Society, Econometric Society, vol. 51(1), pages 7-45, January.
  4. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(1), pages 155-180, Winter.
  5. Bartling, Björn & Fehr, Ernst & Schmidt, Klaus M., 2010. "Screening, Competition, and Job Design: Economic Origins of Good Jobs," IZA Discussion Papers 4710, Institute for the Study of Labor (IZA).
  6. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers, University of California at Berkeley 92-199, University of California at Berkeley.
  7. Florian Englmaier & Stephen Leider, 2012. "Contractual and Organizational Structure with Reciprocal Agents," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 4(2), pages 146-83, May.
  8. Fehr, Ernst & Gachter, Simon, 1998. "Reciprocity and economics: The economic implications of Homo Reciprocans1," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 845-859, May.
  9. Bellemare, Charles & Shearer, Bruce, 2009. "Gift giving and worker productivity: Evidence from a firm-level experiment," Games and Economic Behavior, Elsevier, Elsevier, vol. 67(1), pages 233-244, September.
  10. Kube, Sebastian & Maréchal, Michel André & Puppe, Clemens, 2011. "The currency of reciprocity - gift-exchange in the workplace," Working Paper Series in Economics 25, Karlsruhe Institute of Technology (KIT), Department of Economics and Business Engineering.
  11. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 54(2), pages 293-315, February.
  12. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer, Springer, vol. 9(3), pages 193-208, September.
  13. David H. Autor & David Scarborough, 2008. "Does Job Testing Harm Minority Workers? Evidence from Retail Establishments," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 123(1), pages 219-277, 02.
  14. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(4), pages 543-69, November.
  15. Edwin Leuven & Hessel Oosterbeek & Randolph Sloof & Chris van Klaveren, 2002. "Worker Reciprocity and Employer Investment in Training," Tinbergen Institute Discussion Papers 02-090/3, Tinbergen Institute.
  16. Florian Englmaier & Stephen G. Leider, 2010. "Gift Exchange in the Lab - It is not (only) how much you give ..," CESifo Working Paper Series 2944, CESifo Group Munich.
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Citations

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Cited by:
  1. Maria Micevski, 2013. "Reciprocity, Matching, and Wage Competition," Working Paper Series of the Department of Economics, University of Konstanz, Department of Economics, University of Konstanz 2013-25, Department of Economics, University of Konstanz.
  2. Florian Englmaier & Stephen G. Leider, 2008. "Contractual and Organizational Structurewith Reciprocal Agents," CESifo Working Paper Series 2415, CESifo Group Munich.
  3. C. Giannetti & R. Orsini, 2013. "Being nice with the experimenter?," Working Papers wp913, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Judd Kessler, 2013. "When will there be Gift Exchange? Addressing the Lab-Field Debate with Laboratory Gift Exchange Experiments," CESifo Working Paper Series 4161, CESifo Group Munich.

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