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Do you get what you pay for?

Author

Listed:
  • Chang, Wei-Shiun
  • Ereneo, Sarah Jane
  • Salmon, Timothy C.

Abstract

Prior literature involving the Gift-Exchange Game (GEG) finds that employee effort is increasing with the magnitude of a fixed wage. We re-examine the relationship between effort and wages in a new paradigm, the Wage Request Game (WRG), in which the worker requests their wage. The main mechanisms thought to deliver the GEG results are not present in the WRG which should lead to a different relationship between wages and effort. Our findings show instead that the relationship between effort and wages is unrelated to the origin of the wage. These findings suggest a new explanation for the commonly observed relationship between wages and effort.

Suggested Citation

  • Chang, Wei-Shiun & Ereneo, Sarah Jane & Salmon, Timothy C., 2026. "Do you get what you pay for?," European Economic Review, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:eecrev:v:187:y:2026:i:c:s0014292126001017
    DOI: 10.1016/j.euroecorev.2026.105357
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    Keywords

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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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