Work

Explaining Gift-exchange-the Limits of Good Intentions

Year: 2014

Type: article

Abstract: This paper explores the limitations of intention-based social preferences as an explanation of gift-exchange between a firm and a worker. In a framework with one self-interested and one reciprocal player, gift-giving never arises in equilibrium. Instead, any equilibrium in a large class of multistage games must involve mutually unkind behavior of both players. Besides gift-exchange, this class of games also includes moral hazard models and the rotten kid framework. Even though equilibrium behavior may appear positively reciprocal in some of these games, the self-interested player never benefits from reciprocity. We discuss the relation of these results to the theoretical and empirical literature on gift-exchange in employment relations.

Source: Journal of the European Economic Association

DOI: 10.1111/jeea.12086

Authors: Nick Netzer, Armin Schmutzler

Institution: University of Zurich

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: green

Funder: Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung

Award: Reciprocity and the Design of Institutions