Reciprocity

Have you ever opened your mailbox to find a small plush panda toy or a ribbon-shaped magnet, courtesy of your favourite charity? Did the small gift make you feel obligated to donate in return? Or perhaps you have a friendly neighbour who is always dropping off baked goods, so you try and babysit their children whenever you can.

But what happens when favours are not returned? When you turn down babysitting or don’t write a cheque for charity, you might feel a sense of burden, indebtedness, or guilt. On the other hand, when someone fails to repay you, you may experience a sense of betrayal. The person who hasn’t returned a favour may be perceived as distrustful or dishonourable. Successful and sustainable relationships among humans, whether they be intimate, friendly, or professional, are only formed when taking is balanced with giving.

Social psychologists and behavioural economists refer to this mutually beneficial exchange as “reciprocity.” Reciprocity is a social norm that dictates we reward the positive actions of others with equally positive behaviours. Similarly,  negative actions are punished with negative behaviours.¹

Reciprocal Concession: Drawn from the general norm of reciprocity, Robert Cialdini and colleagues coined the term “reciprocal concession.” It describes the concept of making concessions or compromising for those who make concessions for you. This is an important concept at play in the “door in the face technique.”⁷

Door in the Face Technique: This is a persuasive strategy, most commonly seen in negotiation. A person presents a target with an unreasonably large request, expecting it to be refused. When the target does refuse, the person asks for a smaller, reasonable favour. Due to the norm of reciprocity and reciprocal concession, the target accepts the smaller request.

In 1995, Roy F. Baumeister and Mark R. Leary, two social psychologists, proposed an explanation for much of human behaviour: the need to belong to a larger social group, often achieved through maintaining positive relationships.² This explanation finds its roots in evolutionary theory, which states humans had a better chance at survival when cooperating to work towards a common goal.² Consider our ancestors, who were largely hunters and gatherers. In these environments, living alongside other humans provided protection against threats and a means of sharing resources when facing scarcity. Over time, the advantages of living together evolved into an innate need for belonging among humans.³ Reciprocity, being one such mechanism that allows humans to maintain positive relationships, originates from the fundamental human need to belong.

Although Baumeister and Leary provided theories for the origins of reciprocity, the idea itself has been around since time immemorial. In a 1960 analysis of the concept of reciprocity, Alvin W. Gouldner listed the works of several scholars, dating back to 1916, who invoked this concept.⁴ Neil Coffee traces reciprocity back even further, all the way to ancient Rome.⁵ Gift-giving and exchanging favours was common in ancient Roman society  and was a means of enabling trust among people. It contributed to mutual benefit and social cohesion within the society.⁵

One of the most useful applications of reciprocity and reciprocal concession is the persuasive technique called “door in the face.” The cornerstone research on this technique was done by Robert Cialdini and colleagues in 1975. The experimenters asked college students to supervise a group of juvenile delinquents at a public park for two hours. Only 16.7% of the participants complied with the request. However, when this request followed a much larger request of volunteering at a juvenile detention center for two hours per week for a length of two years, almost 50% of the participants complied with the smaller request.⁷

Used by several businesses, the door in the face technique is when someone initially asks a target for a ridiculously large favour. When the target refuses, the requester then asks for a more reasonable favour. The target normally complies with the smaller request, because they feel obligated to reciprocate for the concession that is granted.⁸ This is often the case with business negotiations, or even haggling with shopkeepers in markets. Shopkeepers may name a high price for a product at first, and when customers do not agree, they may reduce the price to persuade customers to buy the “discounted” item.

Reciprocity also plays a role in economics. Investment games are used to test whether trust and reciprocity function in business settings. The following describes a normal set-up of an investment game:

1. Subjects are divided into two rooms – A and B.
2. Subjects in room A (senders) receive a certain amount of money from the experimenter, and are allowed to give any amount of this money to subjects in room B (recipients).
3. The amount given to recipients is tripled by the experimenter, and the recipient is allowed to give back any of this tripled amount to the original sender.⁹

It has been found through investment games that senders often trust that recipients will reciprocate their favours. Because of this trust, senders tend to send money, and recipients tend to return part of this money.⁹ This is seen in larger settings, such as the formation of trade unions and agreements, which are based on mutual benefit. For example, in international trade, the General Agreement of Tariffs and Trade (GATT) has reciprocity as its central tenet.¹⁰ Trust and reciprocity form the foundation of both large and small economic relationships.

Other studies have shown that reciprocity works in employer-employee relationships and service provider-customer relationships. For instance, workers perceive pay cuts as an insult, thus decreasing work morale as a way of “punishing” the employer.¹¹ Waitresses who smile more are also tipped more by customers.¹² Because of its in-built nature, reciprocity may be seen as a successful strategy to “guilt-trip” others to get something you want in various environments and relationships.

Although reciprocity itself is a widely agreed upon concept, its origins, uniqueness to humans, and the conditions required for it to work are heavily debated. One line of research distinguishes among three types of reciprocity, based on the conditions it operates in. Direct reciprocity is when we help those who have previously helped us. Indirect reciprocity is when we help those we know to be publicly helpful. Generalised reciprocity is when we are motivated to help people in general because we have been helped at some point in the past.¹³ However, there are studies that do not distinguish between different forms of reciprocity at all.

Another line of research, focused on the cognitive mechanisms underlying reciprocity, identifies four types of reciprocity, ranging from low to high cognitive load. Hard-wired reciprocity is an automatic response to help someone immediately after they have helped us. Attitudinal reciprocity is when we associate a general attitude with the person who has helped us before, based on which we help them in the near future. Emotion-based reciprocity is a more selective form which spans over a long term. This is when we help those with whom we associate positive emotions and create social bonds. Finally, calculated reciprocity is when we calculate how another person should be helped, based on how much they have helped us in the past.¹³ However, problems with this research include restricting reciprocity only to a few situations, and claiming it to be a solely human characteristic.

Some studies suggest that reciprocity is based on the outcomes and intentions of a person.¹¹ If an action is beneficial to someone, but originally had no underlying intention of being beneficial, the recipient may not consider it important to repay the person, and vice versa. For instance, when organizations are forced to cut down wages, work morale does not decrease as much as when wages are cut down by choice. Workers understand that there was no intention to cause harm.¹¹

There is not yet a conclusive way of organizing the several forms of reciprocity, leaving just one thing to be true – that reciprocity is a universal and fundamental trait used to strengthen relationships.

Reciprocity and Public Policy

The feasibility of egalitarian policies, based on the belief that everyone deserves equal rights and opportunities, may be explained by humans’ predisposition to reciprocity. Yet, there are individuals who despite this predisposition, are politically opposed to social welfare policies. In a 1998 study, Bowels and Gintis offered an explanation for how the principles of reciprocity that promote egalitarian policies may also be responsible for their opposition.

They analyzed a 1990 study by Christina Fong, in which nationally representative surveys were conducted. The two questions of focus were about whether participants supported an increase or decrease in expenditure on welfare policies, and why they thought the poor were poor. It turned out that 49% of those who believed poverty was due to a lack of effort also believed there was too much expenditure on welfare. On the other hand, 44% of those who thought lack of effort was irrelevant to poverty believed too little was spent on welfare.¹⁴ This belief, that effort is an important determinant for success, was a stronger indicator for opposition to welfare policies than the participants’ years of schooling, income, and parents’ socio-economic status combined.¹⁴ Evidence from this study corroborated with that of several past studies.

In conclusion, Fong found less support for welfare policies that reward people regardless of their contributions to society because they are considered unfair.¹⁴ This is an important concept for policy makers to consider: although they may harness the norm of reciprocity to garner support for social policies, there are possibilities it may backfire and instead generate opposition.

Reciprocity and Contract Enforcement in the Labour Market

Contracts between employers and employees are often unable to define and measure intangible phenomena such as effort, leaving ambiguous gaps in contractual agreements. The fulfilment of these gaps thus relies on reciprocal motivations.¹² Gächter and Kerchsteiger conducted an experiment in 1997 to assess how reciprocity plays a role in choice and amount of effort. The experimental employer was asked to come up with a wage contract that included a set wage and a desired effort level from the employee. This desired level, however, was not the same as the minimum required level. While the employee could then choose their effort level, the employer was bound to pay them the agreed-upon wage. In theory, employees could opt to put in the required minimum effort, and employers could compensate with the lowest possible wages. The experimenters were interested to see if this would induce employers to offer low wages.¹²

The employers made generous compensation offers.  Fourteen percent of the workers reciprocated the offers by maintaining the desired level of effort, while 83% of workers shrunk in their efforts from the desired level, but not to the expected minimum effort level. Their efforts were still substantially higher than the minimum. Gächter and Kerchsteiger found that employees are willing to reciprocate generous compensation by putting in more effort than required.¹² Employers must take into consideration the role of reciprocity in contracts – paying more and giving larger incentives does not always have to mean loss. Instead, it can increase productivity and growth.

How Reciprocity Can Fuel Innovation 

This entry has explored how reciprocity can generate feelings of in-detedness, and may be used to give workers an incentive to put in more effort. What are some other ways in which companies can use reciprocity to induce growth? Can it also be used to induce creation? Read this article to find out about some tangible applications of reciprocity.

Too Much of a Good Thing: Reciprocity and Corruption

Reciprocity is largely considered prosocial behaviour. However, can too much positive reciprocity have negative implications for the society? This article explores a major flipside of reciprocity.

Behavioural Economics on Fairness and Reciprocity

Do we know the extent that reciprocity governs our very way of living? This article offers compelling insights into reciprocity’s significance.

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