Incomplete and Asymmetric Surplus Information in Labor Relations

H. Hennig-Schmidt, B. Rockenbach, A. Sadrieh

Research output: Working paperDiscussion paperOther research output

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Abstract

Numerous laboratory experiments show that workers reciprocate to high wages with high effort, when there is perfect information on the surplus created. Recent field experiments, however, suggest that trust and reciprocity may be lower or absent when the information is incomplete.We report a laboratory experiment with symmetric and asymmetric incomplete surplus information in a bilateral gift exchange setting.We find that trust and reciprocity have a significant positive effect on wages, effort and efficiency.But, all three are substantially lower under incomplete than under complete information.The negative impact on wages and efficiency is even greater with information asymmetry.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages25
Volume2003-121
Publication statusPublished - 2003

Publication series

NameCentER Discussion Paper
Volume2003-121

Fingerprint

Surplus
Labor relations
Wages
Laboratory experiments
Field experiment
Complete information
Information asymmetry
Perfect information
Workers
Gift exchange
Bilateral

Keywords

  • incomplete information
  • industrial relations
  • trusts
  • efficiency

Cite this

Hennig-Schmidt, H., Rockenbach, B., & Sadrieh, A. (2003). Incomplete and Asymmetric Surplus Information in Labor Relations. (CentER Discussion Paper; Vol. 2003-121). Tilburg: Microeconomics.
Hennig-Schmidt, H. ; Rockenbach, B. ; Sadrieh, A. / Incomplete and Asymmetric Surplus Information in Labor Relations. Tilburg : Microeconomics, 2003. (CentER Discussion Paper).
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Hennig-Schmidt, H, Rockenbach, B & Sadrieh, A 2003 'Incomplete and Asymmetric Surplus Information in Labor Relations' CentER Discussion Paper, vol. 2003-121, Microeconomics, Tilburg.

Incomplete and Asymmetric Surplus Information in Labor Relations. / Hennig-Schmidt, H.; Rockenbach, B.; Sadrieh, A.

Tilburg : Microeconomics, 2003. (CentER Discussion Paper; Vol. 2003-121).

Research output: Working paperDiscussion paperOther research output

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N2 - Numerous laboratory experiments show that workers reciprocate to high wages with high effort, when there is perfect information on the surplus created. Recent field experiments, however, suggest that trust and reciprocity may be lower or absent when the information is incomplete.We report a laboratory experiment with symmetric and asymmetric incomplete surplus information in a bilateral gift exchange setting.We find that trust and reciprocity have a significant positive effect on wages, effort and efficiency.But, all three are substantially lower under incomplete than under complete information.The negative impact on wages and efficiency is even greater with information asymmetry.

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Hennig-Schmidt H, Rockenbach B, Sadrieh A. Incomplete and Asymmetric Surplus Information in Labor Relations. Tilburg: Microeconomics. 2003. (CentER Discussion Paper).