Fairness and Learning in Multi-Employee Gift-Exchange Games : An Experimental Analysis

We study the role of norm violations and learning behavior in multi- and single-worker gift-exchange games and find that working with co-workers leads to a twofold effect. First, flexible wages yield moderately higher efforts than in the single-employee treatment. The data suggests that this is caused by learning behavior of workers who realize that higher effort pays off and exert more effort than in the single worker case. Second, when wage discrimination is not possible, effort is crowded-out and is substantially smaller than in the single-employee treatment