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The gift of being chosen

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Abstract

We report evidence from an experiment where an employer selects one of two workers to perform a task for a fixed compensation. Workers differ in their ability. The employer’s payoff depends on the worker’s ability and on a non-contractible effort that the worker exerts once employed. We find that selected workers exert an effort higher than the minimum enforceable one. When the employers can send a free-text form message to the selected worker, workers with low ability exert significantly higher effort than the workers with high ability. The difference in effort overcompensates the difference in ability.

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Notes

  1. For reviews, see Charness and Kuhn (2011), Fehr et al. (2009), or Gächter and Fehr (2002).

  2. In most experiments studying gift-exchange, employers can choose between different wage levels. Consequently reciprocity is identified as high (non-contractible) effort exerted by workers as response to high wage offered by the employers.

  3. As in other experiments, we give workers the possibility of choosing the strictly dominated action of refusing the employer’s proposal. None of our 210 workers chose it.

  4. The only restriction imposed was that the employer could neither identify herself nor indicate anything that might happen after the experiment had ended (e.g., threaten the other group members, promise a side payment, etc.). All messages were screened before being sent, and all complied with these restrictions.

  5. During the experiment we referred to ECU rather than Euros, implementing the conversion rate 1 ECU = 0.1 Euros.

  6. An English version of the instructions is reproduced in the Online Appendix (supplementary material). Full instructions and the software are available upon request.

  7. Participants were informed that the experiment consisted of two parts but they were informed about the content of part 2 only once part 1 was concluded. The second part of the experiment was unrelated to the game described in Sect. 2.

  8. This in line with previous research. Charness (2004) investigates different treatments where wages are chosen by an employer or by a random device and he shows that employees’ behavior is identical when they receive a high wage, irrespective of who makes the decision. In a modified trust game Slonim and Garbarino (2008) find no difference in the percentage returned depending on the intentionality/randomness of the selection.

  9. Employers hired 29 % (17/58) and 34 % (20/58) of low ability workers in the CT and NCT, respectively. These proportions are not significantly different according to a two sample test of proportions, \(z=0.51\), \(p=0.61\). They did not receive any feedback and played a one shot game; therefore, they could not update the initial beliefs on workers’ behavior.

  10. 83 % (48/58) of the employers sent a message. The percentage of employers who chose not to send any message did not significantly differ depending on the ability of the selected worker: 17 % (7/41) for H and 18 % (3/17) for L workers, (two sample tests of proportions, \(z = 0.05\), \(p = 0.96\)).

  11. We choose not to further differentiate among the different motives of fairness and other motives such as for example satisfaction, payoff calculations, etc., since given the nature of communication it is very likely that multiple arguments are present in the same message, which in turn makes it difficult to disentangle the effect of the respective motives on the effort choice of the worker.

  12. Our research assistants were native German speakers and classified the messages looking at the original German text. The Appendix lists the messages sent as well as the final classification. The online Appendix (supplementary material) includes the instructions for classification given to the research assistants.

  13. An alternative way could have been to exclude from the analysis the messages on which agreement was not reached. As shown in the Online Appendix (supplementary material), results are unchanged when (i) we exclude the messages on which agreement was not reached and (ii) when we consider the classification made by each single research assistant separately.

  14. In the cases where the suggestion contained a range of effort levels or an interval we considered the average effort; e.g. if a contribution of 7 or 8 was suggested, we consider 7.50 as the suggested effort. Similarly, if a contribution of ‘5 or more’ or ‘at least 5’ was suggested, we consider 7.5 as suggested effort (obtained as mean of the 6 effort levels from 5 to 10).

  15. We find no differences depending on the ability of the workers: fairness and suggestion are both present in the 75 % of the messages sent to low ability and in the 88 % of the messages sent to high ability (two samples test of proportion, \(z=1.00\), \(p=0.32\)).

  16. Additional results are reported in the Online Appendix (supplementary material).

  17. The average effort exerted by high ability workers is also not significantly different than the one exerted in the NCT (WMW, \(z =1.03\), \(p = 0.30\)).

  18. The Online Appendix (supplementary material) contains further details about the ST.

  19. In the CT and the ST the average effort suggested is 6.97 and 7.12, respectively. Given the parameters presented in Table 1, suggesting an effort level greater than 7 corresponds to asking higher earnings for the employer than for the employee. We conduct an analysis to see if a suggestion of an effort level \(>\) 7 backfires, in the sense that the employees reciprocate less after having received that suggestion. Both in the CT and in the ST we do not find support for this hypothesis [WMW tests \(p > 0.30\) for all comparisons; see the Online Appendix (supplementary material) for details]. Our results are in contrast with previous findings in other games. In a dictator game, Andreoni and Rao (2011) find that when the recipient asks more than the equal division she receives less than if she asks less. In a trust game, Fehr and Rockenbach (2003) and Houser et al. (2008) find that punishment backfires when it is applied to enforce high returns.

  20. A regression analysis performed using a Tobit estimation confirms this result, see the Online Appendix (supplementary material).

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Acknowledgments

We wish to thank Martin Kocher for helpful discussions. We are also grateful for valuable comments from Pedro Rey Biel, two anonymous referees, the editor, and the seminar participants at the Brown Bag Seminar of the Strategic Interaction Group of the Max Planck Institute of Economics in Jena 2012, the THEEM Thurgau Experimental Economics Meeting, 2012, the ESA European Conference, 2012, the AG applied Econometrics at the University of Innsbruck, 2012, and the Eeecon Workshop at the University of Innsbruck 2012. We acknowledge the Max Planck Institute of Economics for their financial support.

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Authors and Affiliations

  1. Department of Economics, Lund University, Box 7082, SE-220 07, Lund, Sweden

    Natalia Montinari

  2. School of Social Sciences, University of Manchester, Arthur Lewis Building, Manchester, M13 9PL, UK

    Antonio Nicolò

  3. University of Innsbruck, Universitätsstr. 15, 6020, Innsbruck, Austria

    Regine Oexl

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  1. Natalia Montinari
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Correspondence to Regine Oexl.

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Appendix: Messages

Appendix: Messages

In Table 6 we report all the messages (translated from German) sent in the CT and the pertaining categories (described in section B.2 in the main file) to which they have been assigned. For each message, column 4 (\(w^k\)) indicates whether it was sent to a low ability (L) or to a high ability worker (H); columns 6 and 7 indicate the final categorization where ‘S’ stands for ‘suggestion’ and ‘F’ for ‘fairness’. For the cases where the two coders disagreed, the final classification is indicated in bold. Disagreement for the category ‘suggestion’ occurred in one out of 48 of the cases (2 %). Specifically, in message No. 42 the first coder assigned 1 while the second coder 0. Disagreement for the category ‘fairness’ occurred in five messages over 48 (10 %). Specifically, in messages No. 12, 13, and 32 the first coder assigned 1 while the second one 0; in messages Nos. 31 and 58 the opposite happened.

Table 6 Messages and categories, part I and part II
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Montinari, N., Nicolò, A. & Oexl, R. The gift of being chosen. Exp Econ 19, 460–479 (2016). https://doi.org/10.1007/s10683-015-9449-9

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