Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26541
Authors: 
Dur, Robert
Year of Publication: 
2008
Series/Report no.: 
CESifo working paper 2496
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.
Subjects: 
Manager-employee relationships
wages
extra-role behavior
sabotage
gift exchange
social exchange
conditional altruism
reciprocity
signaling game
JEL: 
D86
J41
M50
M54
M55
Document Type: 
Working Paper

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