When 3+1 > 4: Gift Structure and Reciprocity in the Field

Duncan Gilchrist (), Michael Luca () and Deepak Malhotra ()
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Duncan Gilchrist: Harvard University
Michael Luca: Harvard Business School, Negotiation, Organizations & Markets Unit
Deepak Malhotra: Harvard Business School, Negotiation, Organizations & Markets Unit

No 14-030, Harvard Business School Working Papers from Harvard Business School

Abstract: Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity (in a context with no future employment opportunities). However, structuring a portion of the wage as a clear and unexpected gift-by offering a raise (with no additional conditions) after the employee has accepted the contract-does lead to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers.

Pages: 28 pages
Date: 2013-09, Revised 2015-04
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:14-030

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