Gift Exchange in the Workplace: Money or Attention?

16 Pages Posted: 25 Nov 2008

See all articles by Robert Dur

Robert Dur

Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

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Abstract

We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention. Contrary to the traditional gift-exchange hypothesis, we show that altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer - namely, a lot of attention - which will induce the employee to stay at the firm and work hard. Our predictions are well in line with some recent empirical findings about gift exchange in the field.

Keywords: manager-employee relationships, wages, extra-role behavior, sabotage, gift exchange, social exchange, conditional altruism, reciprocity, signaling game

JEL Classification: D86, J41, M50, M54, M55

Suggested Citation

Dur, Robert, Gift Exchange in the Workplace: Money or Attention?. IZA Discussion Paper No. 3839, Available at SSRN: https://ssrn.com/abstract=1305823 or http://dx.doi.org/10.2139/ssrn.1305823

Robert Dur (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

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