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Reciprocal preferences and the unraveling of gift-exchange

Arno Riedl and Dariel A.
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Dariel A.: GSBE

No 34, Research Memorandum from Maastricht University, Graduate School of Business and Economics (GSBE)

Abstract: We elicit reciprocal preferences in a firm-worker gift-exchange setting and relate them to actual behavior in a repeated gift-exchange game. We find that only a small minority of 10 percent of workers is materially selfish whereas 90 percent exhibit reciprocal preferences. However, the intensity of reciprocal preferences is weak in the sense that firms maximize profits by not relying on gift-exchange but by offering the lowest possible wage. Workers behavior in the repeated gift-exchange game is predicted by their elicited preferences, but the correlation between preferences and behavior is imperfect. Together with profit maximizing behavior of firms these observations can explain the observed unraveling of gift-exchange over time in our experiment and some recent field experiments.

Keywords: Noncooperative Games; Design of Experiments: Laboratory, Group Behavior; Labor-Management Relations, Trade Unions, and Collective Bargaining: Other (search for similar items in EconPapers)
JEL-codes: C72 C92 J59 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-evo, nep-exp, nep-gth and nep-hrm
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:unm:umagsb:2013034

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