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Incomplete and Asymmetric Surplus Information in Labor Relations

Author

Listed:
  • Hennig-Schmidt, H.
  • Rockenbach, B.
  • Sadrieh, A.

    (Tilburg University, Center For Economic Research)

Abstract

Numerous laboratory experiments show that workers reciprocate to high wages with high effort, when there is perfect information on the surplus created. Recent field experiments, however, suggest that trust and reciprocity may be lower or absent when the information is incomplete.We report a laboratory experiment with symmetric and asymmetric incomplete surplus information in a bilateral gift exchange setting.We find that trust and reciprocity have a significant positive effect on wages, effort and efficiency.But, all three are substantially lower under incomplete than under complete information.The negative impact on wages and efficiency is even greater with information asymmetry.

Suggested Citation

  • Hennig-Schmidt, H. & Rockenbach, B. & Sadrieh, A., 2003. "Incomplete and Asymmetric Surplus Information in Labor Relations," Discussion Paper 2003-121, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:e9188c19-08a5-41ad-8bbe-b44650cd413a
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    File URL: https://pure.uvt.nl/portal/files/599380/121.pdf
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    References listed on IDEAS

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    1. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
    2. 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.
    3. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
    4. Ulrich Kamecke, 1997. "note: Rotations: Matching Schemes that Efficiently Preserve the Best Reply Structure of a One Shot Game," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 409-417.
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    Cited by:

    1. Işgın, Ebru & Sopher, Barry, 2015. "Information transparency, fairness and labor market efficiency," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 33-39.

    More about this item

    Keywords

    incomplete information; industrial relations; trusts; efficiency;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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