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About: Gift-exchange game     Goto   Sponge   NotDistinct   Permalink

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The gift-exchange game is a game that was introduced by George Akerlof and Janet Yellen to model labor relations. The simplest form of the game involves two players – an employee and an employer. The employer first decides whether to award a higher salary to the employee. The employee then decides whether they will work harder or not due to the salary change. Like trust games, gift-exchange games are used to study reciprocity for human subject research in social psychology and economics. If the employer pays extra salary and the employee puts extra effort, then both players are better off than otherwise. The relationship between an investor and an investee has been investigated as the same type of a game.