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Monetary and Non-monetary Gift Exchange

  • Saima Mahmood

    (Pakistan Institute of Development Economics, Islamabad
    Sate Bank of Pakistan)

  • Asad Zaman

    (International Islamic University, Islamabad)

We study the role of reciprocity in a labour market field experiment. Recently, many experiments have been conducted to test the extent to which cash and non-monetary gifts affect workers’ productivity through social exchange. Our experiment concluded that non-monetary gifts are more effective at invoking reciprocal behaviour. Despite a higher preference for money, a non-monetary incentive results in a significant increase in productivity as compared to an equivalent cash gift. Extending the experiment for negative reciprocity, the results highlight the asymmetry of positive and negative reciprocity that exists in the field. Discontinuation of a monetary gift results in a stronger negative effect than the discontinuation of non-monetary gifts

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File URL: http://www.pide.org.pk/pdf/PDR/2010/Volume4/719-740.pdf
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Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 49 (2010)
Issue (Month): 4 ()
Pages: 719–740

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Handle: RePEc:pid:journl:v:49:y:2010:i:4:p:719-740
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  1. Sebastian Kube & Michel Andre Marechal & Clemens Puppe, 2012. "The Currency of Reciprocity: Gift Exchange in the Workplace," American Economic Review, American Economic Association, vol. 102(4), pages 1644-62, June.
  2. Sebastian Kube & Michel André Maréchal & Clemens Puppe, 2006. "Putting Reciprocity to Work - Positive versus Negative Responses in the Field," University of St. Gallen Department of Economics working paper series 2006 2006-27, Department of Economics, University of St. Gallen.
  3. Fehr, Ernst & Kirchsteiger, Georg & Riedl, Arno, 1995. "Gift Exchange and Reciprocity in Competitive Experimental Markets," Economics Series 14, Institute for Advanced Studies.
  4. Fehr, Ernst & Falk, Armin, 2002. "Psychological Foundations of Incentives," IZA Discussion Papers 507, Institute for the Study of Labor (IZA).
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  8. Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997. "Reciprocity as a Contract Enforcement Device: Experimental Evidence," Econometrica, Econometric Society, vol. 65(4), pages 833-860, July.
  9. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 759-789.
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  11. David Masclet & Charles Noussair & Steven Tucker & Marie Claire Villeval, 2001. "Monetary and Non-Monetary Punishment in the Voluntary Contributions Mechanism," Post-Print halshs-00151423, HAL.
  12. Offerman, Theo, 2002. "Hurting hurts more than helping helps," European Economic Review, Elsevier, vol. 46(8), pages 1423-1437, September.
  13. Hausman, Daniel M., 2000. "Revealed preference, belief, and game theory," Economics and Philosophy, Cambridge University Press, vol. 16(01), pages 99-115, April.
  14. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
  15. Florian Englmaier & Stephen G. Leider, 2010. "Gift Exchange in the Lab - It is not (only) how much you give ..," CESifo Working Paper Series 2944, CESifo Group Munich.
  16. Martin Brown & Armin Falk & Ernst Fehr, 2004. "Relational Contracts and the Nature of Market Interactions," Econometrica, Econometric Society, vol. 72(3), pages 747-780, 05.
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