Guilt and Reciprocity in Labor Markets and the Diffusion of Agricultural Innovations

Abstract

This dissertation consists of three essays: The first essay considers a three-player labor market game and illustrates how wage and price decisions may change dramatically when a worker is guilt averse in the sense of wishing not to disappoint the firm's consumers. I incorporate guilt aversion into an effort setting game and obtain predictions thereof in a way not yet considered by labor economists, and I call attention to the fact that one must exercise caution when directly applying Battigalli & Dufwenberg (2007) simple guilt preferences. The results demonstrate that a sufficiently guilt-averse worker will exert costly effort to produce a high quality good so as not to disappoint the consumer, thereby trading material value for psychological well-being. The second essay seeks to understand the conditions under which the reciprocity motivation can alleviate sweatshop conditions. My co-author Martin Dufwenberg and I apply reciprocity preferences to a simple game designed to model a sweatshop. In this project we investigate the influence of a reciprocally behaving consumer on the firm's treatment of the worker. We vary the level of information the consumer has about how the worker has been treated and observe how this affects predictions. We demonstrate that in order to predict appropriately alleviated sweatshop conditions the model must be adapted to allow for the consumer to be motivated by a salient regard for the firm's treatment of the worker. In the third essay I study the role played by experiment associations comprised of scientifically literate farmers in assisting agricultural experiment station researchers in the development of technology and in facilitating the diffusion of biological and non-biological innovation. I examine two such networks of unique structure, the Ontario Agricultural and Experimental Union and the Wisconsin Agricultural Experiment Association. I find that the seed distribution efforts of the Wisconsin Agricultural Experiment Association had an immediate statistically significant positive effect on the productivity of oats. I find that the program of experimentation of the Ontario Agricultural and Experimental Union had a delayed and statically significant positive effect on productivity of oats and peas.