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Gift Exchange and Workers’ Fairness Concerns: When Equality Is Unfair

Abstract:

We study how different payment modes influence the effectiveness of gift exchange as a contract enforcement device. In particular, we analyze how horizontal fairness concerns affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts. ...

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Publisher copy:
10.1111/j.1542-4774.2010.tb00556.x

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Journal:
Journal of the European Economic Association
Volume:
8
Issue:
6
Publication date:
2010-12-05
DOI:
URN:
uuid:2e67ad8b-6ac9-4448-8af8-17231b4a69f9
Local pid:
oai:economics.ouls.ox.ac.uk:15282
Language:
English

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