The employment relationship is to a large extent characterized by incomplete contracts, in which workers have a considerable degree of discretion over the choice of their work effort. This discretion at work kicks in the potential importance of “gift exchange” or reciprocity between workers...

This paper models the firm as a community à la Akerlof [Akerlof, G.A., 1980. A theory of social custom, of which unemployment may be one consequence. Quarterly Journal of Economics 94, 749-775] to account for asymmetric behavior and, in particular, downward rigidity of wages. It is shown that,...

The employment relationship is to a large extent characterized by incomplete contracts, in which workers have a considerable degree of discretion over the choice of their work effort. This discretion at work kicks in the potential importance of "gift exchange" or reciprocity between workers and...