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Size Doesn't Matter! Gift Exchange in Experimental Labor Markets

Author

Listed:
  • Jordi Brandts

    (Department of Business Economics - Institut d'Anàlisi Econòmica)

  • Klarita Gërxhani

    (Faculty of Social Behavioural Science & - Amsterdam Institute for)

  • Arthur Schram

    ()

  • Jolanda Ygosse-Battisti

    (Department of Economics - Getulio Vargas Foundation)

Abstract

We study how the number of traders affects the interaction between a centralized exchange and bilateral negotiations in an experimental labor market with excess supply and incomplete contracts. Our large markets are three times as large as our small markets. In bilateral negotiations firms obtain information about employees' performance in previous jobs. Though market forces put a downward pressure on wages in large markets, reciprocal tendencies do not differ. Hence, the occurrence of bilateral negotiations increases overall efficiency for both market sizes.

Suggested Citation

  • Jordi Brandts & Klarita Gërxhani & Arthur Schram & Jolanda Ygosse-Battisti, 2010. "Size Doesn't Matter! Gift Exchange in Experimental Labor Markets," Post-Print hal-00911830, HAL.
  • Handle: RePEc:hal:journl:hal-00911830
    DOI: 10.1016/j.jebo.2010.09.007
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00911830
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    References listed on IDEAS

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    1. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
    2. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70, pages 322-322.
    3. Charles R. Plott & Vernon L. Smith, 1978. "An Experimental Examination of Two Exchange Institutions," Review of Economic Studies, Oxford University Press, vol. 45(1), pages 133-153.
    4. Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
    5. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
    6. Isaac, R. Mark & Walker, James M. & Williams, Arlington W., 1994. "Group size and the voluntary provision of public goods : Experimental evidence utilizing large groups," Journal of Public Economics, Elsevier, vol. 54(1), pages 1-36, May.
    7. Brandts, Jordi & Riedl, Arno & van Winden, Frans, 2009. "Competitive rivalry, social disposition, and subjective well-being: An experiment," Journal of Public Economics, Elsevier, vol. 93(11-12), pages 1158-1167, December.
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    Cited by:

    1. Benndorf, Volker & Rau, Holger A., 2012. "Competition in the workplace: An experimental investigation," DICE Discussion Papers 53, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    2. Fortuna Casoria & Arno Riedl, 2013. "Experimental Labor Markets And Policy Considerations: Incomplete Contracts And Macroeconomic Aspects," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 398-420, July.
    3. Klarita Gerxhani & Jordi Brandts & Arthur Schram, 2011. "The Emergence of Social Structure: Employer Information Networks in an Experimental Labor Market," Tinbergen Institute Discussion Papers 11-032/1, Tinbergen Institute.
    4. Gose, Karina & Sadrieh, Abdolkarim, 2014. "Strike, coordination, and dismissal in uniform wage settings," European Economic Review, Elsevier, vol. 70(C), pages 145-158.

    More about this item

    Keywords

    Worker Recruitment; Gift Exchange; Experiments; Market Size; C90; J30; J40;

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

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