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The Sequencing of Gift Exchange: A Field Trial

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  • Carpenter, Jeffrey P.

    () (Middlebury College)

Abstract

There is now an extensive literature on "gift exchange" showing that when principals and agents can trade "gifts" (rewards that should not emerge in a competitive equilibrium), exchange becomes more efficient. However, it is not obvious how gift exchange should be organized if the principal's goal is to increase the performance of a reciprocal agent. Specifically, who should make the first gift, the principal or the agent? Although both orderings, by themselves, have been hypothesized and examined in theory and experiments, the literature is largely silent on the comparison. I report the results of a field experiment that compares the principal-first and agent-first orderings to each other and a gift-less control. Consistent with the previous experimental literature, I find that principal-first, gifts do increase agent performance. Unlike the literature, however, I find that agent-first, gifts are also effective. Comparing the two, I see that the agent-first ordering works best, is clearly cheaper to implement and differences appear on both the extensive and intensive margins.

Suggested Citation

  • Carpenter, Jeffrey P., 2017. "The Sequencing of Gift Exchange: A Field Trial," IZA Discussion Papers 10736, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10736
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    References listed on IDEAS

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    Cited by:

    1. Valeria Faralla & Guido Borà & Alessandro Innocenti & Marco Novarese, 2018. "Promises in Group Decision Making," Labsi Experimental Economics Laboratory University of Siena 051, University of Siena.
    2. Marco Faillo & Luigi Mittone & Costanza Piovanelli, 2018. "Cash posters in the lab," CEEL Working Papers 1801, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.

    More about this item

    Keywords

    gift exchange; reciprocity; social norm; incentives; field experiment; charity; fundraising;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General

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