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Reputation and Reciprocity: Consequences for the Labour Relation
Author(s) -
Gächter Simon,
Falk Armin
Publication year - 2002
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00269
Subject(s) - reciprocity (cultural anthropology) , repeated game , reputation , norm of reciprocity , incentive , economics , strong reciprocity , microeconomics , enforcement , social preferences , social psychology , game theory , psychology , political science , law , social capital
Recent evidence highlights the importance of social norms in many economic relations. However, many of these relationships are long term and provide repeated game incentives for performance. We experimentally investigate interaction effects of reciprocity and repeated game incentives in two treatments (one‐shot and repeated) of a gift‐exchange game. In both treatments we observe reciprocity, which is strengthened in the repeated game. A detailed analysis shows that, in the repeated game, some subjects imitate reciprocity. Thus, reciprocity and repeated game incentives reinforce each other. Observed behaviour is robust against experience. We conclude that long‐term interaction is a “reciprocity‐compatible” contract enforcement device. JEL classification : J 30; C 91