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Gift-exchange game

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Equilibrium analysis


Nomal form of gift exchange game
Nomal form of gift exchange game



Some experimental methods and results


Fehr, Kirchsteiger and Riedl (1993, QJE)[14] designed a market in which "employers" and "employees" do not meet. All wages and effort and "employees" are put in different rooms for many experiments, and are told that the counterparties of each transaction are different, and both sides keep "anonymous" transactions from beginning to end. In this way, the influence of expectations of both sides on the "long-term future" is excluded, and the choice of the level of effort of "employees" is completely self-conscious. According to the traditional economic view, employees will be willing to accept any wage greater than 0, and provide the minimum level of effort after receiving the salary. However, the experimental results show that employers always offer wages much higher than the minimum level, while employees almost always provide efforts much higher than the minimum level. This proves that even if there are no other supervision and punishment mechanisms, the wage level in the labor market is often higher than the market-clearing price for some "fair" and "goodwill" motives in exchange for the labor provider's initiative and loyalty.

The experiment of charness (2000, JEBO)[15] wanted to explore what would happen if the benefit of high wages was not given by the employer but a random result or a third party. The results of this experiment are as follows: (1) if wages are generated randomly, employees usually give extra efforts to show "fairness" or compensation, considering that they are after all the employer's money. (2) If, at almost the same income level, employees are told that the wage level is determined by the experimenter, they will think that they don't have to pay a lot of responsibility for the "loss" to the employer, so they will relatively reduce their efforts.

Gneezy and List (2006, Econometrica)[16] set the scene in two volunteer activities. One was to input bibliographic information to the library, the other was to raise funds for a foundation. In both experiments, one group was given a high salary and the other was not. Then, they observed the labor efficiency data. The results showed that the high wage group performed well at the beginning, but then went downhill. When the output per wage was finally calculated, the high wage group was lower than the low wage group, which seemed to prove another feature of "reciprocal behavior", that is, as time goes on, preferential treatment will be taken for granted, thus reducing the willingness of employees to supply labor.

Work Field usage

The gift exchange model is used to explain workers' effort and wages provided by firms in the real world, especially involuntary unemployment. George A. Akerlof described labor contracts as "partial gift exchange". Unlike what is depicted in the simple model above, in real life, employees may exceed the minimum work required[17] and firms may pay more than the market-clearing wage. According to Akerlof's model, this is because the worker’s effort not only depends on the effort itself, wage rate if employed, and the unemployed benefit if unemployed, but also the norm for effort. Thus, to affect these norms, firms may pay more.[18]

Other fields usages

The gift-exchange game is not only used in the workplace but can also be practiced in other areas. For example, in the field of charitable giving, when a charity first makes a gift to a potential donor as part of a donation solicitation, more generous gifts are associated with higher frequency donations, resulting in more donations to the charity.[19]

See also


  5. ^ a b Tagiew, Rustam; Ignatov, Dmitry (2016). "Gift Ratios in Laboratory Experiments" (PDF). CEUR Workshop Proceedings. -1627 (Experimental Economics and Machine Learning): 82–93.
  14. ^ Fehr, E.; Kirchsteiger, G.; Riedl, A. (1993-05-01). "Does Fairness Prevent Market Clearing? An Experimental Investigation". The Quarterly Journal of Economics. 108 (2): 437–459. doi:10.2307/2118338. ISSN 0033-5533.
  15. ^ Charness, Gary (July 2000). "Responsibility and effort in an experimental labor market". Journal of Economic Behavior & Organization. 42 (3): 375–384. doi:10.1016/s0167-2681(00)00096-2. ISSN 0167-2681.
  16. ^ Gneezy, Uri; List, John A (September 2006). "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments". Econometrica. 74 (5): 1365–1384. doi:10.1111/j.1468-0262.2006.00707.x. ISSN 0012-9682.
  17. ^ Homans, George C. (1954). "The Cash Posters: A Study of a Group of Working Girls". American Sociological Review. 19 (6): 724–733. doi:10.2307/2087919. ISSN 0003-1224.
  18. ^ Akerlof, George A. (November 1982). "Labor Contracts as Partial Gift Exchange". The Quarterly Journal of Economics. 97 (4): 543. doi:10.2307/1885099. ISSN 0033-5533.
  19. ^ Falk, Armin (September 2007). "Gift Exchange in the Field". Econometrica. 75 (5): 1501–1511. doi:10.1111/j.1468-0262.2007.00800.x. ISSN 0012-9682.
This page was last edited on 3 March 2021, at 15:43