Working Paper | HBS Working Paper Series | 2015

When 3+1>4: Gift Structure and Reciprocity in the Field

by Duncan Gilchrist, Michael Luca and Deepak Malhotra

Abstract

Do higher wages elicit reciprocity and lead to increased productivity? In a field experiment with 266 employees, we find that paying higher wages, per se, does not have a discernible effect on productivity (in a context with no future employment opportunities). However, structuring a portion of the wage as a clear and unexpected gift—by offering a raise (with no additional conditions) after the employee has accepted the contract–does lead to higher productivity for the duration of the job. Gifts are roughly as efficient as hiring more workers.

Keywords: Wages; Employees;

Citation:

Gilchrist, Duncan, Michael Luca, and Deepak Malhotra. "When 3+1>4: Gift Structure and Reciprocity in the Field." Working Paper. (April 2015. Revised and resubmitted, Management Science.)