A Theoretical Note on Assymmetries in Intensity and Persistence of Reciprocity in Labour Markets

Fongoni, Marco (2018) A Theoretical Note on Assymmetries in Intensity and Persistence of Reciprocity in Labour Markets. Discussion paper. University of Strathclyde, Glasgow.

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    Abstract

    This paper presents a model that can account for, and explain, two well documented empirical asymmetries characterising a worker's reciprocity: negative reciprocity is both stronger, and more persistent, than positive reciprocity. The stronger intensity of negative reciprocity is driven by the worker being loss averse; the longer persistence is driven by the slower adaptation of the worker to wage changes that are perceived as unfair.