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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 of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10736
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    Cited by:

    1. Faralla, Valeria & Borà, Guido & Innocenti, Alessandro & Novarese, Marco, 2020. "Promises in group decision making," Research in Economics, Elsevier, vol. 74(1), pages 1-11.
    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.
    3. Serhiy Kandul & Bruno Lanz & Evert Reins, 2020. "Reciprocity and gift exchange in markets for credence goods," IRENE Working Papers 20-09, IRENE Institute of Economic Research.
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    5. Michel André Maréchal & Christian Thöni, 2018. "Hidden Persuaders: Do Small Gifts Lubricate Business Negotiations?," CESifo Working Paper Series 7070, CESifo.

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    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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