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The effect of production technology on trust and reciprocity in principal-agent relationships with team production

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  • Cobo-Reyes, Ramón
  • Lacomba, Juan A.
  • Lagos, Francisco
  • Levin, Dan

Abstract

We introduce differently sized teams, rather than a single worker, and three production technologies to an otherwise standard gift-exchange environment to study experimentally whether, and to what extent, ‘trust and reciprocity’ is affected. Moving to a team of workers introduces new motivations, such as free riding and coordination burden, that are likely to intensify with team size and the technology used by the firm. We find that the positive relationship between wages and effort, although affected, still holds; workers reduce their efforts when coordination for efficiency is more difficult using a particular production technology. Results also suggest that for any given technology, firms react to their relevant outcome (profitability) and not just to workers’ efforts.

Suggested Citation

  • Cobo-Reyes, Ramón & Lacomba, Juan A. & Lagos, Francisco & Levin, Dan, 2017. "The effect of production technology on trust and reciprocity in principal-agent relationships with team production," Journal of Economic Behavior & Organization, Elsevier, vol. 137(C), pages 324-338.
  • Handle: RePEc:eee:jeborg:v:137:y:2017:i:c:p:324-338
    DOI: 10.1016/j.jebo.2017.03.008
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    More about this item

    Keywords

    Labor market; Gift exchange-game; Production technology; Experiment; Team of workers;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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