Reciprocal preferences and the unraveling of gift-exchange

A. Dariel, A.M. Riedl

Research output: Working paperProfessional

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Abstract

We elicit reciprocal preferences in a firm-worker gift-exchange setting and relate them to actual behavior in a repeated gift-exchange game. We find that only a small minority of 10 percent of workers is materially selfish whereas 90 percent exhibit reciprocal preferences. However, the intensity of reciprocal preferences is weak in the sense that firms maximize profits by not relying on gift-exchange but by offering the lowest possible wage. Workers behavior in the repeated gift-exchange game is predicted by their elicited preferences, but the correlation between preferences and behavior is imperfect. Together with profit maximizing behavior of firms these observations can explain the observed unraveling of gift-exchange over time in our experiment and some recent field experiments.
Original languageEnglish
Place of PublicationMaastricht
PublisherMaastricht University, Graduate School of Business and Economics
DOIs
Publication statusPublished - 1 Jan 2013

Publication series

SeriesGSBE Research Memoranda
Number034

Cite this

Dariel, A., & Riedl, A. M. (2013). Reciprocal preferences and the unraveling of gift-exchange. Maastricht University, Graduate School of Business and Economics. GSBE Research Memoranda, No. 034 https://doi.org/10.26481/umagsb.2013034