This file was created by the TYPO3 extension publications --- Timezone: CEST Creation date: 2025-07-21 Creation time: 23:23:03 --- Number of references 1 Many jobs serve a social purpose beyond profit maximization, contributing positively to society. This paper uses a modified principal-agent gift-exchange game with positive externality (prosocial treatment) to study how workers' prosocial motivation interacts with the use of efficiency wages in stimulating effort. We find that prosocial motivation and efficiency wages are independent in stimulating effort: compared to a standard gift-exchange game (GE treatment), the presence of the externality shifts the agents' effort choice function upwards without affecting its slope. Thus, if principals were profit-maximizers, wage offers should be the same in both treatments. However, principals offer higher wages in the prosocial treatment. We show that this is due to principals in the GE treatment highly underestimating agents' reciprocity and thereby offering wages below the profit-maximizing level. Results from robustness-checks further suggest that our findings are unlikely to be driven by a simple efficiency effect. article 2024 3 16 0899-8256,1090-2473 10.1016/j.geb.2024.03.001 Games and Economic Behavior 145 Elsevier 66-83 https://epub.uni-regensburg.de/id/eprint/57986 Jesper Armouti-Hansen Lea Cassar Anna Deréky Florian Engl