Transparency and Reciprocal Behavior in Employment Relations

29 Pages Posted: 19 Oct 2003

See all articles by Bernd Irlenbusch

Bernd Irlenbusch

London School of Economics & Political Science - Department of Management; IZA Institute of Labor Economics

Dirk Sliwka

University of Cologne - Department of Business Administration and Human Resource Management; IZA Institute of Labor Economics

Date Written: October 2003

Abstract

The impact of transparency on the extent of reciprocal behavior is investigated in a simple repeated gift exchange experiment, where principals set wages and agents respond by choosing effort levels. In addition to the efforts the principals' payoffs are determined by a random component. It is shown that direct reciprocal behavior is much stronger in a more transparent situation where efforts are revealed to the principals. However, there is no significant impact of transparency on average effort as non-transparency leads to a stronger diversity in behavioral patterns such that at the same time the frequency of very low and very large effort levels increases.

Keywords: transparency, reciprocity, reputation, gift exchange, inequity aversion

JEL Classification: C72, C91, J33

Suggested Citation

Irlenbusch, Bernd and Sliwka, Dirk, Transparency and Reciprocal Behavior in Employment Relations (October 2003). IZA Discussion Paper No. 887. Available at SSRN: https://ssrn.com/abstract=459540

Bernd Irlenbusch

London School of Economics & Political Science - Department of Management ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)20 7955 7840 (Phone)
+44 (0)20 7955 6887 (Fax)

HOME PAGE: http://www.lse.ac.uk/collections/management/

IZA Institute of Labor Economics

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

Dirk Sliwka (Contact Author)

University of Cologne - Department of Business Administration and Human Resource Management ( email )

Koln, 50923
Germany

IZA Institute of Labor Economics

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

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