published in: Journal of Economic Behavior and Organization, 2005, 56 (3), 383-403
The impact of transparency on the extent of reciprocal behavior is investigated in a simple
repeated gift exchange experiment, where principals set wages and agents respond by
choosing effort levels. In addition to the efforts the principals’ payoffs are determined by a
random component. It is shown that direct reciprocal behavior is much stronger in a more
transparent situation where efforts are revealed to the principals. However, there is no
significant impact of transparency on average effort as non-transparency leads to a stronger
diversity in behavioral patterns such that at the same time the frequency of very low and very
large effort levels increases.
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