Fairness, or just gambling on it? An experimental analysis of the gift exchange game
Paper Number:
1183
Date:
02/01/2004
Abstract:
Fehr, Kirchsteiger and Riedl [12] experimentally test a labor market in which worker effort levels are chosen after wages are set. They observe high wages and effort levels in the repeated game, contrary to the equilibrium prediction. In a similar experimental test of lemons markets, Lynch Miller, Plott and Porter [23] find support for the equilibrium prediction. The current paper finds more evidence of repeated game efforts than in previous studies. In a model of incomplete information regarding the reciprocal nature of other players, the FKR design is shown to be conducive to reputation effects while the LMPP design is not.
Paper Length:
33 pages
Paper:
wp1183.pdf