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Gift exchange and the separation of ownership and control. (English) Zbl 1274.91276

Summary: Numerous gift-exchange experiments have found a positive wage/effort relationship. In (almost) all these experiments the employer both owns and controls the firm. This paper explores to what extent the separation of ownership and control affects the wage/effort relationship. We compare the standard bilateral gift-exchange game between an owner-manager and a worker with two trilateral ones where the firm is owned by a shareholder and controlled by a manager. The wage/effort relationship is similar in all three situations. Most strikingly, workers reward higher wages with higher effort, even when the manager does not share in the firm’s profits.

MSC:

91B40 Labor market, contracts (MSC2010)
91A90 Experimental studies
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