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Gift Exchange and Reciprocity Experimental Findings from Indonesia

Gift Exchange and Reciprocity Experimental Findings from Indonesia. Berly Martawardaya LabSi – Universita’ di Siena (Italy) and Universitas Indonesia. Structure. Introduction Literature Experiment Setup Results Conclusion. Introduction. Neoclassical economics: - complete contract

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Gift Exchange and Reciprocity Experimental Findings from Indonesia

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  1. Gift Exchange and Reciprocity Experimental Findings from Indonesia Berly Martawardaya LabSi – Universita’ di Siena (Italy) and Universitas Indonesia

  2. Structure • Introduction • Literature • Experiment Setup • Results • Conclusion

  3. Introduction • Neoclassical economics: - complete contract - self-regarding preference • Real world - incomplete contract - self and other regarding preference - repeated interaction

  4. Literature • Other regarding preference Swchartz (1970), Becker (1974), Margolis (1982) • Gift Exchange Akerlof (1982, 1984), Akerlof and Yellen (1990) • Experiments on reciprocity Price & Quality: Fehr, Kirchsteiger and Riedl (1993), Wage as recoprocity: Fehr et al. (1996; 1998)

  5. Experiment Setup • N: 114 • Location U of Indonesia • Subject: undergrad in econ/business • Paper base • Anonymous • Random assignment

  6. Experiment Setup (2) • Control - proposer split 1000 rupiah - responder decide to reject or accept - repeat for 5 rounds • Gift Exchange - preceeded by dictator game - responder have 200 rupiah endowment - gift to proposer multiply by three

  7. Experiment Setup (3) • Will worker (responder) put high effort (positive gift in dictator game) even though there is no explicit comitment that employee (proposer) will relate effort to profit sharing (ultimatum game)?

  8. Results : Average offer (1%)

  9. Results : Average gift (1%)

  10. Result: average rejection rate

  11. Result: average payoff (1%)

  12. Conclusion • Non neoclassical economics behaviour • Complete contract is not pre-condition • Repeated interaction and norms • Gift exchange behaviour observed

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