Can Wages Signal Kindness?
We model the interaction between an employer and a worker with interdependent preferences in a simple one-shot production process. In particular, we assume that the worker becomes kinder if she senses that her employer is an altruist. We assume that intentions are private information. Thus, the wage proposal signals the intentions of the employer to the worker. We show that if the workers have ”reasonable” beliefs, then the unique prediction of the game is a separating equilibrium outcome in which wages are fully informative about the intentions of the employer. However, if there are several employers simultaneously bidding to hire a single worker, then there may exist another equilibrium in which wages are completely uninformative.
|Date of creation:||Nov 2005|
|Date of revision:|
|Contact details of provider:|| Postal: 93, chemin des Mouilles - B.P.167 69131 - Ecully cedex|
Phone: 33(0)472 29 30 89
Fax: 33(0)47229 30 90
Web page: http://www.gate.cnrs.fr/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charness, Gary & Haruvy, Ernan, 2002.
"Altruism, equity, and reciprocity in a gift-exchange experiment: an encompassing approach,"
Games and Economic Behavior,
Elsevier, vol. 40(2), pages 203-231, August.
- Gary Charness & Ernan Haruvy, 1999. "Altruism, equity and reciprocity in a gift-exchange experiment: An encompassing approach," Economics Working Papers 368, Department of Economics and Business, Universitat Pompeu Fabra.
- Charness, Gary B & Haruvy, Ernan, 1999. "Altruism, Equity, And Reciprocity In A Gift-Exchange Experiment: An Encompassing Approach," University of California at Santa Barbara, Economics Working Paper Series qt01n8x8m3, Department of Economics, UC Santa Barbara.
- Fehr, Ernst & Schmidt, Klaus M., 1998.
"A Theory of Fairness, Competition and Cooperation,"
CEPR Discussion Papers
1812, C.E.P.R. Discussion Papers.
- Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 817-868.
- Fehr, Ernst & Schmidt, Klaus M., . "A theory of fairness, competition, and cooperation," Chapters in Economics, University of Munich, Department of Economics.
- Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics 20650, University of Munich, Department of Economics.
- Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
- David K. Levine, 1998.
"Modeling Altruism and Spitefulness in Experiment,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 593-622, July.
- B. Douglas Bernheim & Sergei Severinov, 2000.
"Bequests as Signals: An Explanation for the Equal Division Puzzle,"
NBER Working Papers
7791, National Bureau of Economic Research, Inc.
- B. Douglas Bernheim & Sergei Severinov, 2003. "Bequests as Signals: An Explanation for the Equal Division Puzzle," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 733-764, August.
- Armin Falk & Urs Fischbacher, .
"A Theory of Reciprocity,"
IEW - Working Papers
006, Institute for Empirical Research in Economics - University of Zurich.
- George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
- Ernst Fehr & Simon Gächter, 2000.
"Fairness and Retaliation: The Economics of Reciprocity,"
Journal of Economic Perspectives,
American Economic Association, vol. 14(3), pages 159-181, Summer.
- Ernst Fehr & Simon Gaechter, 2000. "Fairness and Retaliation: The Economics of Reciprocity," CESifo Working Paper Series 336, CESifo Group Munich.
- Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers 040, Institute for Empirical Research in Economics - University of Zurich.
- Vesna Prasnikar & Alvin E. Roth, 1992.
"Considerations of Fairness and Strategy: Experimental Data from Sequential Games,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(3), pages 865-888.
- V. Prasnikar & A. Roth, 1998. "Considerations of fairness and strategy: experimental data from sequential games," Levine's Working Paper Archive 451, David K. Levine.
- Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
- Rajiv Sethi & E.Somanathan, 2002.
Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers
02-05, Indian Statistical Institute, New Delhi, India.
- In-Koo Cho & David M. Kreps, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 102(2), pages 179-221.
- Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
When requesting a correction, please mention this item's handle: RePEc:gat:wpaper:0511. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nelly Wirth)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.