Fairness, or just gambling on it? An experimental analysis of the gift exchange game

Paul Healy ()

No 1183, Working Papers from California Institute of Technology, Division of the Humanities and Social Sciences

Abstract: Fehr, Kirchsteiger and Riedl [12] experimentally test a labor market in which worker effort levels are chosen after wages are set. They observe high wages and effort levels in the repeated game, contrary to the equilibrium prediction. In a similar experimental test of lemons markets, Lynch Miller, Plott and Porter [23] find support for the equilibrium prediction. The current paper finds more evidence of repeated game efforts than in previous studies. In a model of incomplete information regarding the reciprocal nature of other players, the FKR design is shown to be conducive to reputation effects while the LMPP design is not.

Keywords: gift exchange game; fairness; experiment; trust; reputation (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-02
New Economics Papers: this item is included in nep-cbe and nep-evo
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