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Pledging, Praising and Shaming: Experimental Labour Markets in Ghana

Listed author(s):
  • Davies, Elwyn

    ()

    (University of Oxford)

  • Fafchamps, Marcel

    ()

    (Stanford University)

Firm surveys have shown that labour management in developing countries is often problematic. Earlier experimental research (Davies & Fafchamps, 2017) has shown that managers in Ghana are reluctant to use monetary incentives to motivate workers. This paper presents the results from a gift-exchange game experiment in Ghana in which the worker can make a promise to the employer before a contract is offered (ex ante communication) and in which the employer can send negative or positive feedback to the worker after the worker has chosen effort (ex post communication). The results indicate that feedback can help sustain cooperate behaviour (high effort provision), but only if the wage offered is high enough. Feedback reinforces reciprocity concerns on the behalf of the worker. In particular positive messages (praising) leads to higher effort provision, no significant relation between negative feedback and effort can be found. Promises are related to higher effort, but do not necessarily lead to higher wages.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10520.

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Length: 36 pages
Date of creation: Jan 2017
Handle: RePEc:iza:izadps:dp10520
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  1. Ernst Fehr & Armin Falk, 2003. "Wage Rigidity in a Competitive Incomplete Contract Market," Labor and Demography 0305001, EconWPA.
  2. Gautam Rao & Stefano DellaVigna & John List & Ulrike Malmendier, 2016. "Estimating Social Preferences and Gift Exchange at Work," Working Paper 396911, Harvard University OpenScholar.
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  8. Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," ULB Institutional Repository 2013/5927, ULB -- Universite Libre de Bruxelles.
  9. Charness, Gary & Dufwenberg, Martin, 2010. "Bare promises: An experiment," Economics Letters, Elsevier, vol. 107(2), pages 281-283, May.
  10. Christoph Vanberg, 2008. "Why Do People Keep Their Promises? An Experimental Test of Two Explanations -super-1," Econometrica, Econometric Society, vol. 76(6), pages 1467-1480, November.
  11. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  12. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
  13. Rege, Mari & Telle, Kjetil, 2004. "The impact of social approval and framing on cooperation in public good situations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1625-1644, July.
  14. Abigail Barr & Pieter Serneels, 2009. "Reciprocity in the workplace," Experimental Economics, Springer;Economic Science Association, vol. 12(1), pages 99-112, March.
  15. Gachter, Simon & Fehr, Ernst, 1999. "Collective action as a social exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 341-369, July.
  16. David Cooper & John Lightle, 2013. "Erratum to: The gift of advice: communication in a bilateral gift exchange game," Experimental Economics, Springer;Economic Science Association, vol. 16(3), pages 442-442, September.
  17. Abigail Barr, 2001. "Social dilemmas and shame-based sanctions: experimental results from rural Zimbabwe," CSAE Working Paper Series 2001-11, Centre for the Study of African Economies, University of Oxford.
  18. Falk, Armin & Gachter, Simon & Kovacs, Judit, 1999. "Intrinsic motivation and extrinsic incentives in a repeated game with incomplete contracts," Journal of Economic Psychology, Elsevier, vol. 20(3), pages 251-284, June.
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