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Reciprocal preferences and the unraveling of gift-exchange

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  • Dariel, A.
  • Riedl, A.M.

    (Microeconomics & Public Economics)

Abstract

We elicit reciprocal preferences in a firm-worker gift-exchange setting and relate them to actual behavior in a repeated gift-exchange game. We find that only a small minority of 10 percent of workers is materially selfish whereas 90 percent exhibit reciprocal preferences. However, the intensity of reciprocal preferences is weak in the sense that firms maximize profits by not relying on gift-exchange but by offering the lowest possible wage. Workers behavior in the repeated gift-exchange game is predicted by their elicited preferences, but the correlation between preferences and behavior is imperfect. Together with profit maximizing behavior of firms these observations can explain the observed unraveling of gift-exchange over time in our experiment and some recent field experiments.

Suggested Citation

  • Dariel, A. & Riedl, A.M., 2013. "Reciprocal preferences and the unraveling of gift-exchange," Research Memorandum 034, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2013034
    DOI: 10.26481/umagsb.2013034
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