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
November 25, 2013
Harvard Business School NOM Unit Working Paper No. 14-030
Do higher wages elicit reciprocity and hence higher effort? In a field experiment with 266 employees, we find that paying above-market wages, per se, does not have an effect on effort relative to paying market wages. However, structuring a portion of the wage as a clear and unexpected gift (by offering a raise with no further conditions after the employee has accepted the contract – with no future employment) does lead to higher effort for the duration of the job. Targeted gifts are more efficient than hiring more workers. However, the mechanism makes this unlikely to explain persistent above-market wages.
Number of Pages in PDF File: 25working papers series
Date posted: September 27, 2013 ; Last revised: December 3, 2013
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