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When 3 + 1 > 4: Gift Structure and Reciprocity in the Field

28 Pages Posted: 27 Sep 2013 Last revised: 9 Apr 2015

Duncan S. Gilchrist

Harvard University - Department of Economics; Harvard Business School

Michael Luca

Harvard Business School - Negotiations, Organizations & Markets Unit

Deepak K. Malhotra

Harvard Business School - Negotiation, Organizations & Markets Unit

Date Written: April 7, 2015

Abstract

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.

Suggested Citation

Gilchrist, Duncan S. and Luca, Michael and Malhotra, Deepak K., When 3 + 1 > 4: Gift Structure and Reciprocity in the Field (April 7, 2015). Harvard Business School NOM Unit Working Paper No. 14-030. Available at SSRN: https://ssrn.com/abstract=2331487 or http://dx.doi.org/10.2139/ssrn.2331487

Duncan S. Gilchrist

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

Harvard Business School ( email )

Soldiers Field Road
Boston, MA 02163
United States

Michael Luca (Contact Author)

Harvard Business School - Negotiations, Organizations & Markets Unit ( email )

Soldiers Field Road
Boston, MA 02163
United States

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=602417

Deepak K. Malhotra

Harvard Business School - Negotiation, Organizations & Markets Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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