Introduction Described as the economic field that deals with the analysis of how decision-making affects the decisions reached, behavioral economics is a field that has attracted much interest from various scholars (Altman, 24). Economists consider this branch of economics as a cognitive science because it deals with the analysis of decision making. Eric Wanner, one of the early founders of the discipline, describes this economic field as a component of cognitive science in his attempt to explain the foundations and characteristic analysis of the discipline in terms of strengths and weaknesses. Simply put, it is a field of economics that explains the decision-making process of economic agents on the basis of theories formulated in its different branches (Altman, 25-26). Behavioral economics is a diverse subject covering numerous topics, but for the purposes of this research paper, my focus will be on the labor market; equity and reciprocity. Employees as well as their employers have financial interests that they wish to achieve by their entry into the labor market or the industry for which employers recruit employees (Altman, 29-30). The employee will always appear to reciprocate any extra pay from the employer with additional inputs, while the employer will provide incentives to encourage extra production. Literature Review Neoeconomists describe the labor market as one in which employees work for a wage and employers pay wages for work performed. Arkelof's fair wage theory stated that for an employer to pay extra money to the employee, the employee always views the extra money as simply compensation for the above-average work performed (Colin, 2010...... middle of paper .. ....commitment to the tasks they perform. Fairness on the part of the employer is the determining factor in the level of performance of an employee. The essay also illustrated the impact that fairness and reciprocity have on the nature or combination of employment contracts an employer decides to hire for the different tasks performed by different employees There are two classes of employees; some employees fall into the category of fair employees while the rest are trusted employees Most employees however are fair employees who expect fair treatment from their employers. In order to reciprocate generosity with increased production, the most popular type of commitment is the reward and bonus system. Further research needs to be conducted to determine the relationship between equity and reciprocity in the labor market and demand for high-quality goods. to the product market.