Gift Exchange in the Workplace: Money or Attention?

Robert Dur

No 3839, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We develop a model of manager-employee relationships where employees care more for their manager when they are more convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways: by offering a generous wage and by giving attention. Contrary to the traditional gift-exchange hypothesis, we show that altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer ? namely, a lot of attention ? which will induce the employee to stay at the firm and work hard. Our predictions are well in line with some recent empirical findings about gift exchange in the field.

Keywords: signaling game; reciprocity; conditional altruism; manager-employee relationships; social exchange; wages; extra-role behavior; sabotage; gift exchange (search for similar items in EconPapers)
JEL-codes: D86 J41 M50 M54 M55 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2008-11
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-lab and nep-soc
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published - published in: Journal of the European Economic Association, 2009, 7(2-3), 550 - 560

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Related works:
Journal Article: Gift Exchange in The Workplace: Money or Attention? (2009)
Working Paper: Gift Exchange in the Workplace: Money or Attention? (2008)
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