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Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments

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Author Info
Uri Gneezy
John A. List

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Abstract

Recent discoveries in behavioral economics have led scholars to question the underpinnings of neoclassical economics. We use insights gained from one of the most influential lines of behavioral research -- gift exchange -- in an attempt to maximize worker effort in two quite distinct tasks: data entry for a university library and door-to-door fundraising for a research center. In support of the received literature, our field evidence suggests that worker effort in the first few hours on the job is considerably higher in the "gift" treatment than in the "non-gift treatment." After the initial few hours, however, no difference in outcomes is observed, and overall the gift treatment yielded inferior aggregate outcomes for the employer: with the same budget we would have logged more data for our library and raised more money for our research center by using the market-clearing wage rather than by trying to induce greater effort with a gift of higher wages.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12063.

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Date of creation: Mar 2006
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Handle: RePEc:nbr:nberwo:12063

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Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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References listed on IDEAS
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.:
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  10. Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 437-59, May. [Downloadable!] (restricted)
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  12. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Joel Sobel, 2005. "Interdependent Preferences and Reciprocity," Journal of Economic Literature, American Economic Association, vol. 43(2), pages 392-436, June. [Downloadable!] (restricted)
  14. Gneezy, Uri & Rustichini, Aldo, 2000. "A Fine is a Price," Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 1-17, January.
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  16. Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004. "How Robust is Laboratory Gift Exchange?," Experimental Economics, Springer, vol. 7(2), pages 189-205, 06. [Downloadable!]
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  17. 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. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Robert Dur & Hein Roelfsema, 2006. "Social Exchange and Common Agency in Organizations," Working Papers 06-11, Utrecht School of Economics. [Downloadable!]
    Other versions:
  2. Andreas Nicklisch & Tobias Salz, 2008. "Reciprocity and status in a virtual field experiment," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_37, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  3. Mirco Tonin & Michael Vlassopoulos, 2009. "Disentangling the Sources of Pro-social Behavior in the Workplace: A Field Experiment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2008. "The Currency of Reciprocity - Gift-Exchange in the Workplace," IEW - Working Papers iewwp377, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  5. Stefania Bortolotti & Giovanna Devetag & Andreas Ortmann, 2009. "Exploring the effects of real effort in a weak-link experiment," CEEL Working Papers 0901, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
  6. Robert Dur & Arjan Non & Hein Roelfsema, 2008. "Reciprocity and Incentive Pay in the Workplace," Tinbergen Institute Discussion Papers 08-080/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  7. Frederico Finan, 2009. "Vote-Buying and Reciprocity," Working Papers id:1882, esocialsciences.com. [Downloadable!]
  8. Robert Dur, 2008. "Gift Exchange in the Workplace: Money or Attention?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  9. Heike Hennig-Schmidt & Bettina Rockenbach & Abdolkarim Sadrieh, 2008. "In Search of Workers' Real Effort Reciprocity - A Field and a Laboratory Experiment," Discussion Papers 238, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
    Other versions:
  10. Michel André Maréchal & Christian Thöni, 2007. "Do Managers Reciprocate? Field Experimental Evidence From a Competitive Market," University of St. Gallen Department of Economics working paper series 2007 2007-09, Department of Economics, University of St. Gallen. [Downloadable!]
  11. Leuven, Edwin & Oosterbeek, Hessel & Sonnemans, Joep & van der Klaauw, Bas, 2008. "Incentives versus Sorting in Tournaments: Evidence from a Field Experiment," IZA Discussion Papers 3326, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  12. Shchetinin, Oleg, 2009. "Contracting Under Reciprocal Altruism," MPRA Paper 13457, University Library of Munich, Germany. [Downloadable!]
  13. Julio J. Rotemberg, 2007. "Minimally altruistic wages and unemployment in a matching model," Working Papers 07-5, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  14. Fali Huang & Peter Cappelli, 2007. "Employee Screening: Theory and Evidence," Working Papers 09-2007, Singapore Management University, School of Economics. [Downloadable!]
    Other versions:
  15. Robert Dur, 2008. "Gift Exchange in the Workplace," Tinbergen Institute Discussion Papers 08-082/1, Tinbergen Institute. [Downloadable!]
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