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Managerial Payoff and Gift Exchange in the Field

23 Pages Posted: 26 Jan 2012  

Florian Englmaier

Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Stephen Leider

University of Michigan, Stephen M. Ross School of Business

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Date Written: January 26, 2012

Abstract

We conduct a field experiment where we vary both the presence of a gift exchange wage and the effect of the worker’s effort on the manager’s payoff. The results indicate a strong complementarity between the initial wage gift and the agent’s ability to “repay the gift.” We collect information on ability to control for differences and on reciprocal inclination to show that gift exchange is more effective with more reciprocal agents. We present a simple principal-agent model with reciprocal subjects that motivates our empirical findings. Our results offer an avenue to reconcile the recent conflicting evidence on the efficacy of gift exchange outside the lab; we suggest that the significance of gift exchange relations depends on details of the environment.

Keywords: incentives, reciprocity, gift exchange, field experiments

Suggested Citation

Englmaier, Florian and Leider, Stephen, Managerial Payoff and Gift Exchange in the Field (January 26, 2012). CESifo Working Paper Series No. 3707. Available at SSRN: https://ssrn.com/abstract=1992225

Florian Englmaier (Contact Author)

Department of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Stephen Leider

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

HOME PAGE: http://www-personal.umich.edu/~leider/

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