Papers in Lecture 6 by Kube et. al. (2011) and by Saima-Zaman were not covered earlier. These deal with the comparison between monetary rewards and non-monetary rewards. WHY is there any difference between the two? According to economic theory it should work the same whether you give the worker a monetary reward worth $10 and a gift of equivalent value. HOWEVER, in real life it does not work that way? WHY?
To understand this, one needs to understand that there are two different mechanism within every man -- a market exchange mechanism and a social exchange mechanism. These two operate very differently. Furthermore, they conflict with each other; when one operates then the other one does not. Our goal in this lecture will be to study this conflict, and show how this leads to difference between the effect of money rewards and non-monetary ones.
In addition to the material in Kube et. al. (2011) and Saima-Zaman which is attached at bottom of page in Lecture 6, there is some relevant material in Dan Ariely: Predictably Irrational -- relevant readings from this book will be provided.
In addition to previous material, I will cover the following paper -- which is also co-authored with Saima -- in fact, Saima is the PRINCIPAL AUTHOR and I have made only few minor suggestions and edits. This paper is attached below:
Saima Mahmood & Asad Zaman: “Monetary and Non-Monetary Gift Exchange”, Pakistan Development Review, Vol 49 number 4, Winter 2010. .