30,698 research outputs found
Reciprocal Strategies and Aspiration Levels in a Cournot-Stackelberg Experiment
We examine behavior in Cournot and Stackelberg markets in a simple experiment where participants experience both market forms. Moreover, Stackelberg followers have to submit full response strategies. Our main finding is that Stackelberg followers employ rather flat, reciprocal response function, i.e., they punish leaders in who try to exploit their strategic adavantage and are willing to cooperate with cooperative leaders. Also, it turns out that prior exposure to a symmetric market makes followers more aggressive which hints at the role of aspiration levels in markets
Pensions in the laboratory: the role of commitment and reputation for deferred compensation in multi-period labor contracts
This paper examines the relationship between firmsâ wage offers and workersâ supply of effort in a multi-period environment. If firms are able to commit to a schedule of wage payments, in equilibrium they will offer deferred compensation: first-period productivity is positive and wages are zero, while last-period productivity is zero and wages are positive. Workers respond to deferred compensation by supplying sufficient effort to avoid dismissal. In the absence of commitment, firms pay zero wages and workers supply low effort. The experiment produces strong evidence of these predictions. With commitment, we frequently observe deferred compensation and relatively high worker effort. In the absence of commitment, we observe no deferred compensation, much lower wages, and little worker effort. A third treatment where commitment is not possible, but firms are able to build a reputation, produces an intermediate result. Finally, we also find some evidence of gift exchange, in particular in the absence of commitment when deferred compensation does not work
Deferred compensation and gift exchange: an experimental investigation into multi-period labor markets
This paper examines the relationship between firmsâ wage offers and workersâ
supply of effort using a three-period experiment. In equilibrium, firms will offer deferred
compensation: first period productivity is positive and wages are zero, while third period
productivity is zero and wages are positive. The experiment produces strong evidence
that deferred compensation increases worker effort; in about 70 percent of cases subjects
supplied the optimal effort given the wage offer, and there was a strong effort response to
future-period wages. We also find some evidence of gift exchange; worker players
increased the effort levels in response to above equilibrium wage offers by a human, but
not in response to similar offers by a computer. Finally, we find that firm players who are
initially hesitant to defer compensation learn over time that it is beneficial to do so
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