This paper analyzes the effect on performance and earnings of delegating the wage choice to employees. Our results show that such delegation significantly increases effort levels. Moreover, we observe a Pareto-improvement, as the earnings of both employers and employees increase when employers delegate than when they do not. Interestingly, we also find that the employees' performance under delegation is higher than under non-delegation, even for similar wages. While there is strong evidence that behavior reflects strategic considerations, this result also holds for one-shot interactions. A possible non-strategic motivation explaining the positive reaction to delegation is a sense of enhanced responsibility.JEL Classification: C91, D01, J3, J41

ABSTRACT:We introduce three variations of the Hirshleifer-Skaperdas conflict game to study experimentally the effects of post-conflict behavior and repeated interaction on the allocation of effort between production and appropriation. Without repeated interaction, destruction of resources by defeated players can lead to lower appropriative efforts and higher overall efficiency. With repeated interaction, appropriative efforts are considerably reduced because some groups manage to avoid fighting altogether, often after substantial initial conflict. To attain peace, players must first engage in costly signaling by making themselves vulnerable and by forgoing the possibility to appropriate the resources of defeated opponents.

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This paper analyzes the effects of population aging on the preferred legal retirement age. What is revealed is the crucial role that the indirect 'macro' effects resulting from a change in the legal retirement age play in the optimal decision. Two Social Security systems are studied. Under a defined contribution scheme aging lowers the preferred * All correspondence to Francisco Lagos. The authors thank Ignacio Ortuño, Slomo Weber, Francisco Marhuenda, Georges Casamatta, and two anonymous referees for comments on a previous version of this paper.† University of Granada. Faculty of Economics, Campus La Cartuja s/n, Granada, 18011, Spain (Fax: 0034-958249995: e-mail: jlacomba@ugr.es) ‡ University of Granada. Faculty of Economics, Campus La Cartuja s/n, Granada, 18011, Spain (Fax: 0034-958249995: e-mail: fmlagos@ugr.es) 1 legal retirement age. However, under a defined pension scheme the retirement age is delayed. This result shows the relevance of correctly choosing the parameter affected by the dependency ratio in the design of the Social Security programme.JEL classification: H55, J26

We make two contributions in this article. First, we examine whether social comparisons have behavioral effects on workers' performance when a firm can choose workers' wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers' performance. In fact, the relative effect of discrimination in relation to decision rights is larger than in relation to wage. Our second contribution is methodological. We find that our treatment effects are present with both stated effort and a real-effort task, suggesting that both approaches may yield similar results in labor experiments.