NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Toward an understanding of the relative strengths of positive and negative reciprocity

Omar Al-Ubaydli, Uri Gneezy, Min Sok Lee, John A. List

NBER Working Paper No. 16547
Issued in November 2010
NBER Program(s):   LS

A stylized fact is that agents respond more acutely to negative than positive stimuli. Such findings have generated insights on mechanism-design, have been featured prominently in policymaking, and more generally have led to discussions of whether preferences are defined over consumption levels or changes in consumption. This study reconsiders this stylized fact. In doing so, it provides insights into an important domain wherein positive stimuli induce a greater response than negative stimuli: a principal-agent game with reputational considerations and with the agent on the market's short end. This common setting represents an important feature of labor markets with involuntary unemployment.

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Document Object Identifier (DOI): 10.3386/w16547

Published: Judgment and Decision Making, Vol. 5, No. 7, December 2010, pp. 524–539

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