Experimental Labor Markets and Policy Considerations: Incomplete Contracts and Macroeconomic Aspects

Casoria, Fortuna; Riedl, Arno

doi:10.1002/9781118790700.ch2

Cited by 3 publications

(4 citation statements)

References 70 publications

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“…Yet, starting with the seminal study by Fehr et al (1993), it has been shown that, typically, employers pay higher than minimum wages, employees choose higher than minimum effort and there is a significant positive relationship between wages offered and efforts chosen. Numerous replications of this experiment have shown the robustness of these results in many different circumstances (see Charness andKuhn, 2011, andCasoria andRiedl, 2013, for surveys of the literature on gift-exchange experiments).…”

Section: Hidden Action Problemsmentioning

confidence: 72%

Behavioral Aspects of Communication in Organizations

Casoria¹,

Riedl

Werner

2020

SSRN Journal

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This paper reviews experimental studies that investigate the effects of communication on behavior in organizational settings. Two main classes of studies are identified: (a) studies on coordination and competition, which include experimental research that tests whether communication can help to overcome coordination failure within organizations, and (b) studies that analyze the role of communication in alleviating problems arising from information asymmetries at the workplace. The evidence from these studies indicates that communication is suited to improve efficient coordination within firms and to mitigate information problems in employer-employee relationships. In addition, studies are presented that focus on the interaction between communication and monetary incentive schemes in companies.organizations. The experimental approach is especially well-suited for this purpose for at least the following reasons. First, the effects of communication on behavior are difficult to study with observational field data (for instance, company data), as it is basically impossible to reliably track communication patterns between colleagues or between managers and team members. Second, the alternative of using surveys to get insights into the communication patterns and contents between managers and employees also has some shortcomings. For instance, data from surveys might be noisy and inconsistent due to the lack of explicit incentives to think carefully about potential answers. Survey answers about the role of communication within the organization also might not provide the correct picture because of socially desirable answers (e.g., if employees are asked about the way their supervisors communicate with them).Experiments circumvent some of these problems by providing explicit performance based incentives and by controlling the way communication can take place as well as by restricting the feasible communication content. Regarding the role of communication in organizations mostly laboratory experiments and a few field experiments have been been conducted. Both types of experiments have their advantages and disadvantages (for a discussion, see, e.g., Harrison and List, 2004;Levitt and List, 2007;Falk and Heckman, 2009;Levitt and List, 2009) and should be viewed as complementary approaches in gaining insights into the role of communication at the workplace.This paper focuses on studies related to the topics "coordination and competition" and "asymmetric information" because those are of central relevance for processes within organizations. Coordination of activities is key to achieve the goals of organizations in which a large number of members take independent but interactive decisions. The degree to which coordination can be successfully achieved depends on incentives. In some cases, the incentives of agents are aligned so that everyone profits from successful collaboration, making it relatively easy to achieve coordinated behavior that is also in line with the organization's interest. In other circumstances, agents or organ...

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Section: Hidden Action Problemsmentioning

confidence: 72%

Behavioral Aspects of Communication in Organizations

Casoria¹,

Riedl

Werner

2020

SSRN Journal

Self Cite

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“…Firms may be able to do so by explicitly setting a reference point in the incentive scheme (Christ et al, 2012;De Quidt, 2018;Fryer et al, 2012;Lazear, 1991;Luft, 1994) or by affecting the social norm that surrounds them (Akerlof, 1982;Aron, 1990;Aron and Olivella, 1994;Rey-Biel, 2008;Sliwka, 2007). If, for example, most workers obtain a yearly bonus, the normal payment in the firm is the base wage plus the bonus and, thus, earning only the base wage may be perceived as a punishment (Bowles and Polania-Reyes, 2012;Casoria and Riedl, 2013;Sobel, 2005).…”

Section: Organisational Punishment and Individual Preferences And Choicesmentioning

confidence: 99%

“…Models of wages as gift exchange suggest that workers are affected by moral sentiments and reciprocal behaviour when they choose the level of effort in the workplace. Workers react to firms giving high compensation and freedom by exerting high effort, but they respond negatively to rigid monetary schemes (Bolton and Dewatripont, 2005;Casoria and Riedl, 2013;Fehr and Schmidt, 1999;Fehr et al, 2009;Sliwka, 2007;Sobel, 2005). However, in echoing the insights of motivation theory, there is a recognition, in the labour economics literature, that punishment and rewards may have different effects on workers' moral feelings (Fehr and Gächter, 2002a;Gächter et al, 2009), with punishment having a larger negative effect than rewards (Rey-Biel, 2008).…”

Section: 'Deus Ex Machina': 2 Punishment Employee Motivation and Productivitymentioning

confidence: 99%

‘You are free to choose . . . are you?’ Organisational punishment as a productivity incentive in the social science literature

et al. 2021

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This paper investigates the theoretical and empirical relationships between organisational punishment and productivity. We do so by highlighting the contributions of two academic fields to this topic: management and economics. We underscore the many common theoretical and empirical grounds across management and economics. We heighten, in particular, how motivation and learning theories have contributed to the development of both theoretical and empirical research on this topic. This paper also argues that this debate could be significantly advanced if insights stemming from industrial relations and labour process theory were also considered since these disciplines have traditionally focussed on macro-issues such as how changes in the economic/institutional contexts may affect the likelihood that organisations will resort to punishment. In order to foster future research on this topic, three research themes were developed: a) freedom of choice and the role of contract completeness; b) perception of punishment, monitoring, and productivity; and c) punishment, productivity and exogenous variables.

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“…These findings have spawned a large literature (e.g.,, Fehr et al, 1996Fehr et al, , 1997Fehr et al, , 1998aFehr and Falk, 1999;Gächter and Falk, 2002;Hannan et al, 2002;Brandts and Charness, 2004;Brown et al, 2004;Charness, 2004). See Fehr et al (2009), Charness and Kuhn (2011), Casoria andRiedl (2013), andCooper andKagel (2016) for surveys.…”

Section: Introductionmentioning

confidence: 99%

An assemblage of discrimination and social preferences

Gagnon¹

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People interested in the research are advised to contact the author for the final version of the publication, or visit the DOI to the publisher's website.• The final author version and the galley proof are versions of the publication after peer review.• The final published version features the final layout of the paper including the volume, issue and page numbers. Link to publication General rightsCopyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights.• Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal.If the publication is distributed under the terms of Article 25fa of the Dutch Copyright Act, indicated by the "Taverne" license above, please follow below link for the End User Agreement:

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Experimental Labor Markets and Policy Considerations: Incomplete Contracts and Macroeconomic Aspects

Cited by 3 publications

References 70 publications

Behavioral Aspects of Communication in Organizations

Behavioral Aspects of Communication in Organizations

‘You are free to choose . . . are you?’ Organisational punishment as a productivity incentive in the social science literature

An assemblage of discrimination and social preferences

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