The Intrinsic Value of Decision Rights

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. Philosophers, psychologists, and economists have long argued that certain d rights carry not only instrumental value but may also be valuable for their ow The ideas of autonomy, freedom, and liberty derive their intuitive appealpartly -from an assumed positive intrinsic value of decision rights. Providin evidence for the existence of this intrinsic value and measuring its size, how intricate. Here, we develop a method capable of achieving these goals. The dat that the large majority of our subjects intrinsically value decision rights beyond th strumental benefit. The intrinsic valuation of decision rights has potentially im consequences for corporate governance, human resource management, and o job design: it may explain why managers value power, why employees apprec with task discretion, why individuals sort into self-employment, and why the r tion of decision rights is often very difficult and cumbersome. Our method and may also prove useful in developing an empirical revealed preference foundat concepts such as "freedom of choice" and "individual autonomy."

Wage delegation in the field

“…In line with the idea that employees value decision rights even beyond their intrinsic value (Bartling, Fehr, & Herz, ), previous empirical research (Falk & Kosfeld, ; Fehr, Herz, & Wilkening, ) suggests that treating employees fairly in terms of expanding their discretionary power may lead to better organizational outcomes, such as increased effort provision. Accordingly, it is only reasonable that some pioneering companies such as Ebay, Virgin, or Netflix experiment with advancements of ordinary empowerment strategies, leaving the choice of the working hours, supervisors, or the paid wage to employees' discretion.…”

Strategic incentives to human capital

“…The more decisions knowledge workers make, the more they can direct their activities toward their own goals, granting greater weight to the pursuit of objectives that interest them more, such as problems they are more confident or passionate about or actions that are instrumental to other worker goals (e.g., future career, external visibility). In addition, autonomy is intrinsically valuable to some workers (Bartling, Fehr, and Herz, ). Although autonomy implies that some worker actions will not benefit the firm directly, the firm will nonetheless derive benefits because autonomy helps motivate knowledge workers to participate in the project and expend greater effort.…”

On the merit of equal pay: Performance manipulation and incentive setting

“…Managers thus seem reluctant to rely exclusively on equal pay to deter performance manipulation. This could be because managers intrinsically value their decision rights over the pay of their subordinates (e.g., McClelland, 1975;Bartling et al, 2014) or because they believe employees value payment schemes that are at least partly based on individual performance metrics (e.g., Ogbonnaya et al, 2017).…”