Rent-seeking versus productive activities in a multi-task experiment

Oosterbeek, Hessel; Sloof, Randolph; Sonnemans, Joep

doi:10.1016/j.euroecorev.2010.09.007

Cited by 8 publications

(3 citation statements)

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“…The only other multitask principal-agent experiment we know of is by Oosterbeek, Sloof and Sonnemans (2006). In contrast to Fehr and Schmidt, rather than choosing between two complementary, productive activities, Oosterbeek, Sloof and Sonnemans' agent chooses between a productive and a 'rent-seeking' activity.…”

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confidence: 99%

Lab Labor: What Can Labor Economists Learn from the Lab?

Charness

Kühn

2011

Handbook of Labor Economics

204

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Lab Labor: What Can Labor Economists Learn from the Lab? *This paper surveys the contributions of laboratory experiments to labor economics. We begin with a discussion of methodological issues: why (and when) is a lab experiment the best approach; how do laboratory experiments compare to field experiments; and what are the main design issues? We then summarize the substantive contributions of laboratory experiments to our understanding of principal-agent interactions, social preferences, unionfirm bargaining, arbitration, gender differentials, discrimination, job search, and labor markets more generally. JEL Classification:C9, J0Keywords: labor economics, laboratory experiments, principal-agent theory, personnel economicsCorresponding author:Peter Kuhn Department of Economics University of California Santa Barbara, CA 93106 USA E-mail: pjkuhn@econ.ucsb.edu * Manuscript prepared for Handbook of Labor Economics, volume 4, Orley Ashenfelter and David Card, editors. We thank Michael Kuhn and Loni Spilberg for excellent research assistance. We have done our utmost to identify as many lab experimental papers in labor economics as possible, and to represent the results of these papers accurately. Given the volume of recent research in this area and the deadline we have faced in writing this review, it is inevitable that we have missed some important work. We also sincerely hope that we have not mischaracterized any paper's conclusions. The authors apologize for these limitations in advance and nevertheless hope that our review provides a helpful guide to the 'lab labor' literature to date.The economics literature has witnessed an explosion of laboratory experiments in the past 20 years. Many of these experiments have focused on topics that are central to the field of labor economics, including how workers respond to various forms of compensation, and the economics of discrimination, arbitration, bargaining, and matching. In this chapter we survey the contributions of laboratory experiments to our understanding of these questions.We begin our review with a discussion of methodological issues: First, we pose the general question of why (and more importantly when) a labor economist might want to conduct a laboratory experiment: What types of questions, if any, are laboratory experiments best suited to answer? How do laboratory experiments compare to field experiments? Next, once one has decided to conduct a laboratory experiment, how should it be designed? Here we review the main methodological decisions an experimenter typically needs to make, and the advantages and disadvantages of the various choices.The second half of our review turns its attention to the substantive issues in labor economics that have been addressed using laboratory experiments. While these are wideranging, we focus our review on the set of issues that have generated probably the largest volume of experimental papers in labor economics: the effects of compensation policies on the supply of effort by workers. We do this in two parts. The firs...

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confidence: 99%

Lab Labor: What Can Labor Economists Learn from the Lab?

Charness

Kühn

2011

Handbook of Labor Economics

204

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“…The results showed that an increase in the payment for the correct solution increases the number of correct solutions at the expense of the total number of solutions submitted. In another experiment, Oosterbeek et al (2011) showed that incentivizing an unproductive investment results in an increase in the unproductive investment and a decrease in the productive investment.…”

Section: Related Literaturementioning

confidence: 99%

Missing the Forest for the Trees: When Monitoring Quantitative Measures Distorts Task Prioritization

Dadon,

Zultan

2024

Preprint

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“…The present article sheds a new light on the transaction cost economics approach to the theory of the firm by studying the link between investment in an outside option and other‐regarding behavior. Oosterbeek, Sloof, and Sonnemans () (referred to OSS hereafter) study a similar link and relate it to the property rights approach (Grossman and Hart ; Hart and Moore ) to the theory of the firm. OSS study the link between productive incentives and rent‐seeking incentives in a multitasking environment.…”

Section: Relationship To the Literaturementioning

confidence: 99%

Investment in Outside Options as Opportunistic Behavior: An Experimental Investigation

Morita

Servátka

2018

Southern Economic Journal

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Ex-post opportunistic behavior, commonly present in bilateral trade relationships, is a key element of the transaction cost economics. Investment in outside options is a prime example of such opportunism and often leads to inefficiency, for example by exerting effort to search for alternative business partners even if it does not add trade value. We experimentally investigate a bilateral trade relationship in which standard theory assuming self-regarding preferences predicts that the seller will be better off by investing in the outside option to improve his bargaining position. The seller's investment, however, might negatively affect the buyer's other-regarding preferences if the investment is viewed as opportunistic. We find overall support for our hypotheses that arise from the link between other-regarding behavior and opportunism. Our findings suggest that when the transaction cost economics approach is applied to the design of a governance structure, other-regarding preferences should be taken into account. -post opportunistic behavior leads to ex-post inefficiency. This is significantly different from ex-ante inefficiency, the focus of the property-right theory of the firm (Grossman and Hart 1986;Hart and Moore 1990;Hart 1995). In the property-rights theory, the surplus (appropriable-quasi rents) created by relation-specific investment is shared between two parties through efficient bargaining. The surplus-sharing leads to inefficiency in ex-ante investment when contracts are incomplete, and the theory studies the roles of asset ownership in mitigating this ex-ante inefficiency. See Whinston (2003) and Gibbons (2005) for clear discussions on the differences between the transaction cost economics and the property-right theory of the firm. See 65 5 The derivation of conjectures based on the logic of the Revealed Altruism theory (Cox, Friedman, and Sadiraj 2008) is presented in Appendix A.

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Rent-seeking versus productive activities in a multi-task experiment

Cited by 8 publications

References 40 publications

Lab Labor: What Can Labor Economists Learn from the Lab?

Lab Labor: What Can Labor Economists Learn from the Lab?

Missing the Forest for the Trees: When Monitoring Quantitative Measures Distorts Task Prioritization

Investment in Outside Options as Opportunistic Behavior: An Experimental Investigation

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