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When 3+1 > 4: Gift Structure and Reciprocity in the Field

Author

Listed:
  • Duncan Gilchrist

    (Harvard University)

  • Michael Luca

    (Harvard Business School, Negotiation, Organizations & Markets Unit)

  • Deepak Malhotra

    (Harvard Business School, Negotiation, Organizations & Markets Unit)

Abstract

Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity (in a context with no future employment opportunities). However, structuring a portion of the wage as a clear and unexpected gift-by offering a raise (with no additional conditions) after the employee has accepted the contract-does lead to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers.

Suggested Citation

  • Duncan Gilchrist & Michael Luca & Deepak Malhotra, 2013. "When 3+1 > 4: Gift Structure and Reciprocity in the Field," Harvard Business School Working Papers 14-030, Harvard Business School, revised Apr 2015.
    • Handle: RePEc:hbs:wpaper:14-030
    as

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    References listed on IDEAS

    as
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