Does Reciprocity Persist Over Time?

We report the results from three distinct experiments, conducted in the Netherlands and in the United States, which extend the Gift-Exchange paradigm (Fehr et al., 1993; Fehr et al., 1997) for the study of worker-employer relationships. We focus on the effect of long time delays between the time at which workers learn their wage and when they choose their effort level, on the relationship between wage and effort. We compare effort choices made on the same day workers learn their wage, with those made several weeks afterward. While the average effort chosen is the same under the two time lags, a positive and significant relationship between wage and effort appears consistently only in the short-run, while in the long-run, the relationship is weaker and less consistent. We also find that only workers who receive a wage equal to or below their self-reported fair wage exhibit significant reciprocal behavior, a pattern that we interpret as revealing negative rather than positive reciprocity in worker decisions. Using a new technology that tracks facial expressions called NoldusTM FaceReader, we find that the emotion of anger is associated with reciprocal responses in the short-run, but this association is weaker in the long-run.