When 3+1>4
Subtitle: gift structure and reciprocity in the field
By: Duncan Gilchrist, Michael Luca, Deepak Malhotra
Contributors: Luca, Michael; Malhotra, Deepak, 1975-; Harvard Business School
Series: Working paper / Harvard Business School -- 14-030; Working paper (Harvard Business School) -- 14-030
Publisher: Harvard Business School
Published: 2013
Place of publication: Boston]
Language: eng
Number of pages: 23
Work titles: It's not the size of the gift; it's how you present it
Description: Do higher wages elicit reciprocity and hence higher effort? In a field experiment with 266 employees, we find that paying above-market wages, per se, does not have an effect on effort relative to paying market wages. However, structuring a portion of the wage as a clear and unexpected gift (by hiring at a given wage, and then offering a raise with no further conditions after the employee has accepted the contract) does lead to higher effort for the duration of our job. This subtle but critical difference sheds light on the conditions under which higher wages will lead to reciprocity. We find that the impact of the gift is pronounced for workers with the most experience and workers who have worked most recently--precisely the individuals who would recognize it is a gift. The effects of the gift are higher for workers with lower historical wages, and in fact it increases productivity more than it increases cost for this group. Our findings show that targeted gifts can be effective, but that the reciprocity measured after surprising an employee with a raise is fundamentally different from that posited to explain persistent above-market wages.
Notes: "September 2013. (Revised November 2013.)"--Publisher's Web site.

Revision of It's not the size of the gift; it's how you present it: new evidence on gift exchange from a field experiment.

Includes bibliographical references (pages 13-14).