Does Reciprocity Persist Over Time?

We report the results from three distinct experiments, conducted in the Netherlands and in the United States, which extend the Gift Exchange paradigm (Fehr et al., 1993; Fehr et al., 1997) for the study of worker-employer relationships. We focus on the effect of long time delays between the time at which workers learn their wage and when they choose their effort level, on the relationship between wage and effort. We compare effort choices made on the same day workers learn their wage, with those made several weeks afterward. Our two effort choices are therefore “cold” choices. While the average effort chosen is similar under the two time lags, a positive and significant relationship between wage and effort appears consistently only in the short-term. In the long-term, the relationship is weaker and less consistent. The difference between the two time horizons is driven by the greater effort provision of workers receiving low wages. We also find more extensive reciprocal behavior by workers who receive a wage below their self-reported fair wage than those who receive more, and that this asymmetry in reciprocal behavior around the fair wage weakens after several weeks. Using a new technology that tracks facial expressions called Noldus FaceReader, we find that the emotion of anger is associated with reciprocal responses in the short-term, but this association is weaker in the long-term.