The effect of production technology on trust and reciprocity in principal-agent relationships with team production

•We introduce differently sized teams rather than just a single worker and three production technologies to an otherwise standard gift-exchange environment to study experimentally if, and to what extent, ‘trust and reciprocity,’ as found in earlier studies, is affected.•Moving to a team of workers introduces new motivations, such as free riding and coordination burden, that are likely to intensify with team size and the technology used by the firm.•We find that the positive relationship between wages and effort, although affected, still holds; workers reduce their efforts when coordination for efficiency is harder in a larger team and a particular production technology.•Results also suggest that for any given technology, firms react to their relevant outcome (profitability) and not just to workers’ efforts.