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Co-employment of permanently and temporarily employed agents

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  • Werner Güth

    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Martin G. Kocher

    ()
    (University of Munich, Department of Economics)

  • Vera Popova

    (Max Planck Institute of Economics, Strategic Interaction Group)

Abstract

One-shot interaction and repeated interaction often co-exist in the real world. We study possible behavioral effects of this co-existence in a principal-agent setting, in which a principal simultaneously employs a permanent and a temporary agent. Our experimental results indicate that there is "discrimination" between the two agents and that the available information for agents determines the extent of this discrimination, even though the theoretical solution of the game implies equal treatment of agents. Discrimination is, thus, a consequence of reciprocity. Agents that are discriminated against react negatively by withholding effort.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2010-016.

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Date of creation: 16 Mar 2010
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Handle: RePEc:jrp:jrpwrp:2010-016

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Keywords: principal-agent problem; permanent and temporary employment; fairness; wage discrimination;

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Cited by:
  1. Daniele Nosenzo, 2013. "Pay Secrecy And Effort Provision," Economic Inquiry, Western Economic Association International, vol. 51(3), pages 1779-1794, 07.
  2. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2008. "The Impact of Social Comparisons on Reciprocity," Discussion Papers 2008-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Kocher, Martin G. & Luhan, Wolfgang J. & Sutter, Matthias, 2012. "Testing a Forgotten Aspect of Akerlof's Gift Exchange Hypothesis: Relational Contracts with Individual and Uniform Wages," IZA Discussion Papers 6415, Institute for the Study of Labor (IZA).
  4. Sven Fischer & Eva-Maria Steiger, 2009. "Exploring the Effects of Unequal and Secretive Pay," Jena Economic Research Papers 2009-107, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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