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Is reciprocity really outcome-based? A second look at gift-exchange with random shocks

Brent Davis, Rudolf Kerschbamer () and Regine Oexl ()
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Regine Oexl: University of Innsbruck

Journal of the Economic Science Association, 2017, vol. 3, issue 2, 149-160

Abstract: Abstract By means of a laboratory experiment, Rubin and Sheremeta (Manag Sci 62(4):985–999, 2016), study a bonus-version of the gift-exchange game, including two treatment variations. First they vary whether the effort provided by the agent directly translates into output for the principal, or whether it is distorted by a shock. Second, for the condition with a shock they vary whether the shock is observed by the principal, or not. The authors’ main findings are that (1) the introduction of an unobservable shock significantly reduces welfare; and (2) informing the principal about the size of the shock does not restore gift-exchange. In a replication study we largely reproduce finding (1), but we fail to confirm finding (2). Our data suggests that small behavioral differences in the initial rounds lead to a hysteresis effect that is responsible for the differences in results across studies.

Keywords: Gift-exchange; Principal agent model; Incomplete contracts; Random shocks; Outcome-based reciprocity; Replication study; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D63 D81 H50 (search for similar items in EconPapers)
Date: 2017
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