The influence of potential on wages and effort

  title={The influence of potential on wages and effort},
  author={Gary E. Bolton and Peter Werner},
  journal={Experimental Economics},
Abstract We investigate how employee potential influences wage offers and effort exertion in a gift exchange experiment. In particular, we test if gift exchange based on a commonly accepted norm for wage differentiation can emerge in a setting where the wage demands of agents are heterogeneous. We also analyse how communication by principals responds to the unequal wage demands and how it influences agents’ decisions about working effort in the presence of varying degrees of bargaining power… CONTINUE READING
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