Estimating Social Preferences and Gift Exchange with a Piece-Rate Design

65 Pages Posted: 29 Jun 2020

See all articles by Stefano DellaVigna

Stefano DellaVigna

University of California, Berkeley; National Bureau of Economic Research (NBER)

John A. List

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Ulrike Malmendier

University of California, Berkeley - Department of Economics; University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Gautam Rao

Harvard University - Department of Economics

Date Written: June 2020

Abstract

We design two field experiments to estimate the nature and magnitude of workers' social preferences towards their employers. Unlike previous gift-exchange field experiments, we vary piece rates in addition to gift treatments. This piece-rate design allows us to estimate the elasticity of effort to motivation and in turn identify aspects of the workers' social preferences. The first experiment measures productivity-units of output produced in a fixed amount of time. The second experiment measures a form of labor supply-the willingness to work for extra time. Using the piece-rate treatments, we document that productivity is rather unresponsive to motivation, while labor supply is very responsive. In terms of social preferences, we document, first, that workers provide effort for their employer, but are insensitive to the return to the employer. This result is consistent with models of 'warm glow' or social norms, rather than pure altruism towards the employer. Second, while we do not detect any effect of the gifts in the productivity experiment, we find sizable positive impacts in the labor-supply experiment. We show that, at least in part, this different response to gifts is explained by different elasticities of productivity and labor supply, highlighting the importance of the piece-rate design.

Suggested Citation

DellaVigna, Stefano and List, John A. and Malmendier, Ulrike and Rao, Gautam, Estimating Social Preferences and Gift Exchange with a Piece-Rate Design (June 2020). CEPR Discussion Paper No. DP14931, Available at SSRN: https://ssrn.com/abstract=3638035

Stefano DellaVigna (Contact Author)

University of California, Berkeley ( email )

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John A. List

University of Chicago - Department of Economics ( email )

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IZA Institute of Labor Economics

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Ulrike Malmendier

University of California, Berkeley - Department of Economics ( email )

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Berkeley, CA 94720-3880
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University of California, Berkeley - Haas School of Business ( email )

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Gautam Rao

Harvard University - Department of Economics ( email )

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