Cash posters in the lab

Marco Faillo (), Luigi Mittone and Costanza Piovanelli

No 1801, CEEL Working Papers from Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia

Abstract: Our paper reproduces the cash posters framework à la Homans (1953, 1954) in a laboratory setting with a twofold aim: first of all, it explores the gift-exchange between employers and employees, both in terms of wage- effort and in terms of effort-potential leniency in punishment; secondly, it investigates whether employees’ behavior is driven also by solidarity concerns towards their unlucky peers. We propose a novel experimental design with a modified version of the gift-exchange game with real effort, punishment, and multiple rounds (Fehr et al., 1997): each employer is matched with two employees and she has the possibility to punish each of them if their individual production is lower than that asked. Each employee’s production risks to be reduced by a random intervention and, in our treatment, each employee has the possibility to renounce to a part of his production to give it to his coworker in need. Our data support the well-known relation between wage and effort, but suggest that employers are not willing to overlook employees non-compliance, neither when employees exerted high effort in the past, nor when their coworkers exert high effort. In our treatment, employees not only exploit the possibility to help their needy peers, but they tend also to exert higher effort towards their employers. Consequently, the employers are those who earn more from employees’ solidarity, and the gap in earnings between employers and employees becomes even greater in our treatment.

Keywords: Solidarity; Gift-exchange; Reciprocity; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D81 D91 M52 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-exp and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwpce:1801

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