TY  - RPRT
        AU  - Huck, Steffen
AU  - Seltzer, Andrew
AU  - Wallace, Brian
        TI  - Deferred Compensation and Gift Exchange: An Experimental Investigation into Multi-Period Labor Markets
        PY  - 2004/Jun/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1193
        UR  - https://www.iza.org/index.php/publications/dp1193
        AB  - 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.
        KW  - gift exchange
KW  - deferred compensation
KW  - pensions
KW  - experimental labor economics
KW  - personnel economics
KW  - incentives
KW  - shirking
        ER  -