The Impact of Social Comparisons on Reciprocity

22 Pages Posted: 27 Nov 2012

See all articles by Simon Gaechter

Simon Gaechter

University of Nottingham; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Daniele Nosenzo

University of Nottingham

Martin Sefton

University of Nottingham - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 2012

Abstract

In this paper, we investigate how social comparison information about referent others (i.e., learning what similar others do, and how they are treated) affects reciprocal relationships. Using three‐person gift‐exchange games, we study how employees’ reciprocity towards an employer is affected by pay comparison information (what co‐workers earn) and effort comparison information (how co‐workers perform). We find strong evidence of the effects of effort comparison: employees are more willing to reciprocate by choosing high effort in response to a high wage if they observe others doing so. In our setting, we find somewhat weaker evidence of the effects of pay comparison.

Keywords: Effort comparisons, gift exchange, pay comparisons, reciprocity, social comparisons

JEL Classification: A13, C92, J31

Suggested Citation

Gachter, Simon and Nosenzo, Daniele and Sefton, Martin, The Impact of Social Comparisons on Reciprocity (December 2012). The Scandinavian Journal of Economics, Vol. 114, Issue 4, pp. 1346-1367, 2012. Available at SSRN: https://ssrn.com/abstract=2181274 or http://dx.doi.org/10.1111/j.1467-9442.2012.01730.x

Simon Gachter (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Daniele Nosenzo

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Martin Sefton

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

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