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The Emergence of Social Structure: Employer Information Networks in an Experimental Labor Market

Author

Listed:
  • Klarita Gerxhani

    (University of Amsterdam)

  • Jordi Brandts

    (Autonoma University, Barcelona)

  • Arthur Schram

    (University of Amsterdam)

Abstract

This discussion paper resulted in an article in Social Networks (2013). Volume 35, issue 4, pages 541-560. We use laboratory experiments to investigate how employers develop social structures for sharing information about the trustworthiness of job candidates, when worker opportunism is possible. The experimental data show that substantial information sharing emerges. Two types of information networks are observed. One consists of 'anonymity networks' where information is anonymously and voluntarily provided as a collective good for all employers to use. The other type is a 'reciprocity network' where information sharing is driven by the rewarding of previously given information by the requestor. In both types, the extent of information sharing depends on the costs of providing it. Moreover, information sharing enables employers to recruit trustworthy workers which creates a high quality of trading, benefiting both employer and worker.

Suggested Citation

  • Klarita Gerxhani & Jordi Brandts & Arthur Schram, 2011. "The Emergence of Social Structure: Employer Information Networks in an Experimental Labor Market," Tinbergen Institute Discussion Papers 11-032/1, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110032
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    File URL: http://papers.tinbergen.nl/11032.pdf
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    References listed on IDEAS

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    1. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
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    3. Milgrom, Paul R, 1988. "Employment Contracts, Influence Activities, and Efficient Organization Design," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 42-60, February.
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    5. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009. "Social Connections and Incentives in the Workplace: Evidence From Personnel Data," Econometrica, Econometric Society, vol. 77(4), pages 1047-1094, July.
    6. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 114(497), pages 684-708, July.
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    Cited by:

    1. Ying Pan, 2011. "Born with The Right Surname: Lineage Networks and Political and Economic Opportunities in Rural China," Departmental Working Papers 2011-15, Department of Economics, Louisiana State University.

    More about this item

    Keywords

    Social structure; Information networks; Recruitment; Experiments;

    JEL classification:

    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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