Research On Reciprocity Effect Based On DK Motivation Fairness

How to motivate employee and reconcile the internal contradiction in an enterprise is the mainproblem of Management. To solve the problems, the traditional economics which assume thatpeople are purely selfish and only pursue personal material interests develops beautifulincentive contract theories. But many life phenomena, psychic intuition andexperimental evidences have demonstrated that people not only concern their materialgain, but also concern others welfare and behavioral motivation. Rabin first captured thepsychological game process and portrayed it as “returning the favor, tooth for a tooth”,established the famous motivational fairness game model and make great achievementin behavior game theory. Dufwenberg and Kirchsteiger inherited the idea of Rabin andextended the motivation fairness model to dynamic strategy environment. The paper isbased on Dufwenberg and Kirchsteiger motivation fairness model and researches thereciprocal preference effect from incentive and benefit coordination two perspectives,which on one hand provides a new explanation for the inconsistencies between theoryand reality, on the other hand provides useful suggestions for the enterprise incentivemechanism design, decision making, culture construction and so on.Firstly, this paper studies the reciprocal incentive effect under different informationconditions based on Dufwenberg and Kirchsteiger motivation fairness model. Themodel concludes that under complete information condition, when agent have enoughreciprocal preference, principal will quit enforceable contract and give agent morefreedom, and when principal have reciprocal preference, agent will have incentive toblandish principal before the final game, which motivating agent to hard work. Inaddition, under incomplete information condition, relative to the optimization ofrational condition, it gives principal the opportunity to obtain more material utility onthe premise that agent’s effort level is not reduced to incorporate agent’s reciprocalpreference. Essentially, this conclusion describes the existence of cooperativeequilibrium under different information conditions, emphasizes the importance ofhuman management in the enterprise.Secondly, the research of interest coordinate effect is concentrated in two areas:convergence of interest disagreement and weakening of negative reciprocity, the formeris considered from principal reciprocity angle, the latter is described from theperspective of agent reciprocity. Considering the convergence of interest disagreement, this paper constructs a two-period dynamic game model based on Dufwenberg andKirchsteiger motivation fairness model. The result shows that in a dynamic strategyenvironment, reciprocity still has significant incentive effect, principal’s reciprocitymotivation may make employees’ optimal decision behavior occur some degree ofconvergence, which plays a role of contracts to some extent, and under certainconditions, principal’s profit will be greater than the income level under the condition ofrationality. In the study of weakening negative reciprocity, this paper, from theperspective of behavioral game theory, proves that under certain conditions,participants’ negative reciprocity behavior will be weakened by incorporating moves ofthe objective third party based on the Dufwenberg and Kirchsteiger motivation fairnessmodel, so as to provide a new research angle for China’s social disputes resolutionmechanism.Finally, as an extension study, this paper analyzes the team production basedCharness and Rabin social preferences model. Holmstrom classic team productionmodel assumes that participants have a purely self-interest preferences, and proves suchimpossibility theorem that ‘a team can not achieve Pareto optimality with the budgetbalance’. When members of a team have Charness and Rabin social preferences, theteam’s productivity is higher than that the classical model predicts. So the team hiresmembers with Charness and Rabin social preferences can achieve Pareto improvementand Pareto optimal. Therefore, Holmstrom’s theorem that ‘a team can not achievePareto optimality with the budget balance’ does not hold when considering Charnessand Rabin social preferences. So it explains the confliction between the theory andreality, and enriches the team productivity research from behavioral economicsperspective.