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Gift Exchange in a Multi-worker Firm

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  • Sandra Maximiano

    ()
    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

  • Randolph Sloof

    ()
    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

  • Joep Sonnemans

    ()
    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

Abstract

One of the main findings of a large body of gift exchange experiments is that in an incomplete contracts environment workers on average do not shirk and usually provide more than the minimum enforceable effort level. In general, 40 to 60 percent of the workers reward higher wages with higher effort. These results are observed for simple one-employer - one-worker relationships. In this paper we investigate whether they generalize to the more realistic situation in which the employer employs several workers. We compare a bilateral gift exchange game with a treatment in which each employer has four workers. We find that effort levels in the latter treatment are only marginally lower. Gift exchange thus appears to be robust to increases in the size of the workforce and intention-based reciprocity rather than social preferences seems to be the main driving force behind gift exchange.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-100/1.

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Date of creation: 14 Sep 2004
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Handle: RePEc:dgr:uvatin:20040100

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Keywords: gift exchange; multiple workers; reciprocity; experiments;

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