Wage claim detracts reciprocity in labor relations: experimental study of gift exchange games

Tetsuo Yamamori () and Kazuyuki Iwata ()
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Tetsuo Yamamori: Dokkyo University
Kazuyuki Iwata: Matsuyama University

Journal of Economic Interaction and Coordination, 2023, vol. 18, issue 3, No 5, 573-597

Abstract: Abstract Although workers’ wage claims are common in the workplace, the literature has failed to statistically examine their impact on the reciprocal relationships between workers and managers. We overcome this issue by conducting laboratory experiments based on a one-shot gift exchange game in the context of firm–worker relationships. Our design accepts two types of voice by workers regarding the contract wage with their firm, both defined as cheap talk. One voice communicates only the desirable wage for the workers, whereas the second voice additionally communicates their future efforts. We find that both types of voice do not increase firms’ offers but instead reduce agreement contract rates. Furthermore, they undermine workers’ reciprocity regardless of the wage levels offered by the firm, thus reducing the effort levels post-agreement in an incomplete employment contract. Additional experiments revealed that the voice’s adverse effects persist even for repeated interactions. However, workers’ voices, including future efforts, lead to higher wage offers, which outweigh the adverse effect on workers’ reciprocal behaviors; that is, it increases the effort level after the agreements.

Keywords: Labor-management dispute; Wage claim; Cheap talk; Social preference; Gift exchange game; Economic experiment (search for similar items in EconPapers)
JEL-codes: C92 J3 J42 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11403-023-00378-9

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