Partial Gift Exchange in an Experimental Labor Market: Impact of Subject Population Differences, Productivity Differences, and Effort Requests on Behavior*

R. Lynn Hannan, John Kagel () and Donald V. Moser
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R. Lynn Hannan: Georgia State University
Donald V. Moser: University of Pittsburgh

Journal of Labor Economics, 2002, vol. 20, issue 4, pages 923-951

Abstract: We report a gift exchange experiment. Firms make wage offers; workers respond by determining an effort level. Higher effort is more costly to workers, and firms have no mechanism for punishing or rewarding workers. Consistent with the gift exchange hypothesis, workers provide more effort at higher wages, but undergraduates provide substantially less effort than MBAs. Evidence suggests this results from differences in prior work experience. Firms' nonbinding effort requests are at least partially honored, resulting in increased overall effort for undergraduates. Although higher wages are relatively more costly for lower productivity firms, workers do not provide them with more effort.

Date: 2002
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