Gift-Exchange, Incentives, and Heterogeneous Workers

By incorporating reciprocity in an otherwise standard principal-agent model, I investigate the relation between monetary gift-exchange and incentive pay, while allowing for worker heterogeneity. I assume that some, but not all, workers care more for their principal when they are convinced that the principal cares for them. The principal can be egoistic or altruistic. Absent worker heterogeneity, an altruistic principal signals his altruism by offering relatively weak incentives and a relatively high expected total compensation. However, the latter is not always required to credibly signal altruism. Furthermore, since some workers do not reciprocate the principal’s altruism, the principal may find it optimal to write a contract that simultaneously signals his altruism and screens reciprocal worker types. Such a contract is characterised by excessively strong incentives and a relatively high expected total compensation.reciprocity, gift-exchange, signaling game, incentive contracts, screening

Reciprocity and Incentive Pay in the Workplace

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.Reciprocity, social exchange, incentive contracts, double moral hazard, GSOEP

Training participation and the role of reciprocal attitudes

Using data from the German Socio-Economic Panel (SOEP), I examine the relation between workers’ reciprocal attitudes, as measured in 2005 and 2010, and participation in work-related training courses in 2007 and 2013, respectively. Theory predicts that employers find it more profitable to invest in human capital of workers who have positively reciprocal attitudes, because they are more likely to return their employer’s kindness with higher effort and/or loyalty. The findings are mixed, depending on the survey year. I find that positively reciprocal workers are more likely to participate in employer-financed training in 2007, in particular when training is general. Also consistent with theoretical expectations, I do not find a relation between workers’ reciprocal attitudes and participation in training that is not financed by the employer. However, workers’ reciprocal attitudes are not related to training participation in 2013. A possible explanation is that employers use training to induce reciprocal feelings in a slack labour market only

Do ut Des: Incentives, Reciprocity and Organizational Performance

Economen benadrukken traditioneel het belang van financiële prikkels voor arbeidsmotivatie. De laatste jaren is er ook aandacht voor andere relevante motieven. Een van deze motieven is reciproc

Training participation and the role of reciprocal attitudes

Using data from the German Socio-Economic Panel, I examine the relation between workers' reciprocal attitudes, as measured in 2005 and 2010, and participation in work-related training courses in 2007 and 2013, respectively. Theory predicts that employers find it more profitable to invest in human capital of workers who have positively reciprocal attitudes, because they are more likely to return their employer's kindness with higher effort and/or loyalty. The findings are mixed, depending on the survey year. I find that positively reciprocal workers are more likely to participate in employer-financed training in 2007, in particular when training is general. Also, consistent with theoretical expectations, I do not find a relation between workers' reciprocal attitudes and participation in training that is not financed by the employer. However, workers' reciprocal attitudes are not related to training participation in 2013. A possible explanation is that employers use training to induce reciprocal feelings in a slack labour market only. (JEL codes: M53 and D91)

Employee recognition and performance: a field experiment

This paper reports the results from a controlled field experiment designed to investigate the causal effect of public recognition on employee performance. We hired more than 300 employees to work on a three-hour data-entry task. In a random sample of work groups, workers unexpectedly received recognition after two hours of work. We find that recognition increases subsequent performance substantially, and particularly so when recognition is exclusively provided to the best performers. Remarkably, workers who did not receive recognition are mainly responsible for this performance increase. This result is consistent with workers having a preference for conformity

Reciprocity and Incentive Pay in the Workplace

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay

Reciprocity and Incentive Pay in the Workplace

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay