Abstract

http://ssrn.com/abstract=1550444
 
 

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The Effects of Contract Generosity and Feedback on Reciprocity, Trust and Cooperation


Khim Kelly


University of Waterloo - School of Accounting and Finance

Patricia M. S. Tan


Nanyang Technological University (NTU) - Division of Accounting

December 1, 2009


Abstract:     
This study experimentally examines how the generosity of an incentive contract offered by an experimental firm to a pair of employees and a feedback system that provides information on individual employee cooperativeness affect the sustainability of cooperation. Both contract generosity and the feedback system do not provide explicit economic incentives for cooperation. We find that when there is no feedback system, contract generosity increases the sustainability of cooperation and trust in fellow employees. Introducing the feedback system improves the sustainability of cooperation and trust in fellow employees. However, the feedback system reduces the positive impact of contract generosity on cooperation sustainability, possibly because it crowds out reciprocity by shifting employees’ focus from their relationship with the firm to their relationship with fellow employees. Our results suggest that firms can rely on reciprocity and feedback, rather than explicit economic incentives, to motivate sustained cooperation and improve interpersonal trust.

Number of Pages in PDF File: 35

Keywords: group incentive, contract generosity, feedback, reciprocity, trust, cooperation

JEL Classification: M46

working papers series


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Date posted: February 10, 2010  

Suggested Citation

Kelly, Khim and Tan, Patricia M. S., The Effects of Contract Generosity and Feedback on Reciprocity, Trust and Cooperation (December 1, 2009). Available at SSRN: http://ssrn.com/abstract=1550444 or http://dx.doi.org/10.2139/ssrn.1550444

Contact Information

Khim Kelly (Contact Author)
University of Waterloo - School of Accounting and Finance ( email )
Waterloo, Ontario N2L 3G1
Canada
Patricia M. S. Tan
Nanyang Technological University (NTU) - Division of Accounting ( email )
Nanyang Business School
Singapore, 639798
Singapore
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