Size Doesn't Matter! Gift Exchange in Experimental Labor Markets

Jordi Brandts (1) , Klarita Gërxhani (2) , Arthur Schram , Jolanda Ygosse-Battisti (3)

1 Department of Business Economics
2 Faculty of Social Behavioural Science &
3 Department of Economics

We study how the number of traders affects the interaction between a centralized exchange and bilateral negotiations in an experimental labor market with excess supply and incomplete contracts. Our large markets are three times as large as our small markets. In bilateral negotiations firms obtain information about employees' performance in previous jobs. Though market forces put a downward pressure on wages in large markets, reciprocal tendencies do not differ. Hence, the occurrence of bilateral negotiations increases overall efficiency for both market sizes.

Mots clés: Worker Recruitment; Gift Exchange; Experiments; Market Size; C90; J30; J40

Domaines: Économie et finance quantitative [q-fin]

Jordi Brandts, Klarita Gërxhani, Arthur Schram, Jolanda Ygosse-Battisti. Size Doesn't Matter! Gift Exchange in Experimental Labor Markets. Journal of Economic Behavior and Organization, 2010, 76 (3), pp.544. ⟨10.1016/j.jebo.2010.09.007⟩. ⟨hal-00911830⟩