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Assurance Problem in Gift Exchange Game: An Experimental Study

Author

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  • Kean Siang Ch’ng

    (School of Social Sciences, Universiti Sains Malaysia, 11800 Penang, Malaysia)

Abstract

The workers’ reciprocity in a simple Gift Exchange Game has been demonstrated in prior research to be enforcement problem. We showed that potential future interactions could not motivate the workers significantly because of assurance problem. Lack of information about employers’ reciprocal type made workers reluctant to cooperate. We conducted three experimental treatments to investigate the effort patterns. We found that workers’ efforts were not significantly different between with and without repetition effect. Workers did not cooperate much even when there was enforcement. The assurance problem was overcome when workers could judge the reciprocal type of the employer by comparing current wage with market wage. We found that workers responded more to market wage than current wage and were significantly more cooperative.

Suggested Citation

  • Kean Siang Ch’ng, 2011. "Assurance Problem in Gift Exchange Game: An Experimental Study," Economic Analysis and Policy, Elsevier, vol. 41(1), pages 33-108, March.
    • Handle: RePEc:eee:ecanpo:v:41:y:2011:i:1:p:33-108
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    More about this item

    Keywords

    Reciprocity; Assurance Problem; Wage Rent; Focal Point;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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