Gift Exchange and Reciprocity Experimental Findings from Indonesia

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