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Respect as an Incentive


  • Eriksson, Tor

    () (Department of Economics, Aarhus School of Business)

  • Villeval, Marie Claire

    () (University of Lyon)


Assuming that people care not only about what others do but also on what others think, we study respect as a non-monetary source of motivation in a context where the length of the employment relationship is endogenous. In our three-stage gift-exchange experiment, the employer can express respect by giving the employee costly symbolic rewards after observing his level of effort. This experiment sheds light on the extent to which symbolic rewards are used, how they affect employees’ further effort, the duration of relationships, and the profits of employers. Furthermore, we study whether employers’ decisions to give symbolic rewards are driven by strategic considerations, by manipulating the bargaining power of employers and employees. We find that employers make use of symbolic rewards and chiefly to express their satisfaction with the employee. Indeed, symbolic rewards are more frequently used when there is excess supply of labor in the market while they are used in almost the same proportion when the market is balanced and when there is excess demand of labor. They are associated with higher profits and increased probability of continuing employment relationships. Overall, however, the opportunity of expressing respect does not improve efficiency compared with an environment in which it does not exist, possibly due to a crowding-out of extrinsic incentives by the availability of non-monetary incentives

Suggested Citation

  • Eriksson, Tor & Villeval, Marie Claire, 2010. "Respect as an Incentive," Working Papers 10-8, University of Aarhus, Aarhus School of Business, Department of Economics.
  • Handle: RePEc:hhs:aareco:2010_008

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    References listed on IDEAS

    1. Ben-David, Dan & Papell, David H., 1997. "International trade and structural change," Journal of International Economics, Elsevier, vol. 43(3-4), pages 513-523, November.
    2. Ben-David, Dan, 2001. "Trade liberalization and income convergence: a comment," Journal of International Economics, Elsevier, vol. 55(1), pages 229-234, October.
    3. Ben-David, Dan & Papell, David H., 1995. "The great wars, the great crash, and steady state growth: Some new evidence about an old stylized fact," Journal of Monetary Economics, Elsevier, vol. 36(3), pages 453-475, December.
    4. Ben-David, Dan, 1996. "Trade and convergence among countries," Journal of International Economics, Elsevier, vol. 40(3-4), pages 279-298, May.
    5. Dan Ben-David, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 653-679.
    6. Gil-Pareja, Salvador & Llorca-Vivero, Rafael & Martinez-Serrano, Jose Antonio, 2007. "Did the European exchange-rate mechanism contribute to the integration of peripheral countries?," Economics Letters, Elsevier, vol. 95(2), pages 303-308, May.
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    Cited by:

    1. Ashraf, Nava & Bandiera, Oriana & Jack, Kelsey, 2012. "No margin, no mission? A Field Experiment on Incentives for Pro-Social Tasks," CEPR Discussion Papers 8834, C.E.P.R. Discussion Papers.
    2. Saima Naeem & Asad Zaman, 2013. "For Love or Money? Motivating Workers," PIDE-Working Papers 2013:90, Pakistan Institute of Development Economics.

    More about this item


    Respect; Symbolic rewards; Incentives; Labor market; Experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects


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