%0 Report
        %A Huck, Steffen
%A Seltzer, Andrew
%A Wallace, Brian
        %T Deferred Compensation and Gift Exchange: An Experimental Investigation into Multi-Period Labor Markets
        %D 2004
        %8 2004 Jun
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 1193
        %U https://www.iza.org/index.php/publications/dp1193
        %X This paper examines the relationship between firms’ wage offers and workers’ supply of effort
using a three-period experiment. In equilibrium, firms will offer deferred compensation: first
period productivity is positive and wages are zero, while third period productivity is zero and
wages are positive. The experiment produces strong evidence that deferred compensation
increases worker effort; in about 70 percent of cases subjects supplied the optimal effort
given the wage offer, and there was a strong effort response to future-period wages. We also
find some evidence of gift exchange; worker players increased the effort levels in response to
above equilibrium wage offers by a human, but not in response to similar offers by a
computer. Finally, we find that firm players who are initially hesitant to defer compensation
learn over time that it is beneficial to do so.
        %K gift exchange
%K deferred compensation
%K pensions
%K experimental labor economics
%K personnel economics
%K incentives
%K shirking