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

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  • Uri Gneezy
  • John A. List

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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Bibliographic Info

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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Publication status: published as Gneezy, Uri, and John A. List. “Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments.” Econometrica 74, 5 (September 2006): 1365-1384.
Handle: RePEc:nbr:nberwo:12063

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