When 3 + 1 > 4: Gift Structure and Reciprocity in the Field
Duncan S. Gilchrist
Harvard University - Department of Economics; Harvard Business School
Harvard Business School - Negotiations, Organizations & Markets Unit
Deepak K. Malhotra
Harvard Business School - Negotiation, Organizations & Markets Unit
April 7, 2015
Harvard Business School NOM Unit Working Paper No. 14-030
Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity (in a context with no future employment opportunities). However, structuring a portion of the wage as a clear and unexpected gift – by offering a raise (with no additional conditions) after the employee has accepted the contract – does lead to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers.
Number of Pages in PDF File: 28
Date posted: September 27, 2013 ; Last revised: April 9, 2015
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