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When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets

Ernst Fehr, Erich Kirchler, Andreas Weichbold and Simon Gächter
Journal of Labor Economics
Vol. 16, No. 2 (April 1998), pp. 324-351
DOI: 10.1086/209891
Stable URL: http://www.jstor.org/stable/10.1086/209891
Page Count: 28
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets
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Abstract

Do competitive markets remove the effect of social norms on market outcomes? Or are norms capable of exerting a persistent influence? In this article we report the results of a series of competitive market and bilateral bargaining experiments. They indicate that the norm of reciprocity gives rise to wages that are persistently above the competitive level. Moreover, wages under bilateral bargaining conditions coincide with wages in competitive markets, indicating that competition has a limited effect when the norm of reciprocity is operative. In addition, the results show that workers' reciprocal behavior increases effort and, hence, the efficiency of trades.

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