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Attribution and reciprocity in a simulated labor market: An experimental investigation

Gary Charness

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: While papers such as Akerlof and Yellen (1990) and Rabin (1993) argue that psychological considerations such as fairness and reciprocity are important in individual decision-making, there is little explicit empirical evidence of reciprocal altruism in economic environments. This paper tests whether attribution of volition in choosing a wage has a significant effect on subsequent costly effort provision. An experiment was conducted in which subjects are first randomly divided into groups of employers and employees. Wages were selected and employees asked to choose an effort level, where increased effort is costly to the employee, but highly beneficial to the employer. The wage-determination process was common knowledge and wages were chosen either by the employer or by an external process. There is evidence for both distributional concerns and reciprocal altruism. The slope of the effort/wage profile is clearly positive in all cases, but is significantly higher when wages are chosen by the employer, offering support for the hypothesis of reciprocity. There are implications for models of utility and a critique of some current models is presented.

Keywords: Experiment; fairness; intentionality; productivity; reciprocity; wages; Leex (search for similar items in EconPapers)
JEL-codes: C91 D21 J30 J38 J41 (search for similar items in EconPapers)
Date: 1996-09, Revised 1997-10
References: Add references at CitEc
Citations: View citations in EconPapers (32)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:283

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