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on Experimental Economics |
| By: | Alessandro Innocenti; Antonio Nicita |
| Abstract: | In this paper we compare - in the laboratory - stoppage and virtual strike. Our experiment confirms that higher wages offered by an employer lead to considerably more costly effort provision. The number of strikes, the level of efforts and average total payoffs are higher under virtual strike than under standard strike. However, when standard strike is associated with reciprocal externalities, it induces higher effort levels, higher payoffs and an extremely reduced number of strikes than virtual strike. It is unclear whether this behavior re?ects reciprocity or other forms of social preferences. However our results might explain why standard strikes rather than virtual ones are generally adopted by workers. |
| Keywords: | virtual strike, cooperation, reciprocity, fairness, experiments |
| JEL: | C91 D74 D78 J52 K31 M55 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:usi:labsit:026&r=exp |
| By: | Christiane Ernst; Christian Thöni |
| Abstract: | We report results from experimental first-price, sealed-bid, all-pay auctions for a good with a common and known value. We observe bidding strategies in groups of two and three bidders and under two extreme information conditions. As predicted by the Nash equilibrium, subjects use mixed strategies. In contrast to the prediction under standard assumptions bids are drawn from a bimodal distribution: very high and very low bids are much more frequent than intermediate bids. Standard risk preferences cannot account for our results. However, bidding behavior is consistent with the predictions of a model with reference dependent preferences as proposed by the prospect theory. |
| Keywords: | All-pay Auction; Prospect Theory, Experiment |
| JEL: | D44 D72 D80 C91 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:usg:dp2009:2009-25&r=exp |
| By: | Georgellis, Yannis; Gregoriou, Andros; Tsitsianis, Nikolaos |
| Abstract: | Although existing studies in the strategic management literature examine the importance of reference points in the context of managerial decisions vis-à-vis organizational performance, there is surprisingly little evidence on how reference earnings affect employees' wellbeing and behavior. The present study closes this gap by investigating adaptation dynamics towards reference earnings in the context of employees’ behavioral responses to social comparisons. We argue that a wedge between actual and aspiration-level earnings causes discontent that spurs employees into action to materialize their aspirations. The robustness of such action depends on the size of the wedge in a nonlinear fashion, a hypothesis supported by our findings. Nevertheless, heterogeneity in behavioral responses is evident across the public and private sectors and across gender and educational attainment. Such heterogeneity could be partially attributed to differences in public service motivation among public and private sector employees, to the different weights that employees place on pecuniary vs. non-pecuniary rewards, and whether reference earnings are likely to trigger behavioral responses through a 'jealousy' or through an 'ambition' channel. These findings have implications for the design of strategic human resource management policies to establish reward structures encouraging employees to adopt risk attitudes that are consistent with an overall business strategic plan. |
| Keywords: | adaptation; reference earnings; comparison income; reference-dependent preferences; ESTAR models |
| JEL: | J45 D01 C2 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17021&r=exp |
| By: | Fioretti, Guido |
| Abstract: | A novel decision theory is emerging out of sparse findings in economics, mathematics and, most importantly, psychology and computational cognitive science. It rejects a fundamental assumption of the theory of rational decision-making, namely, that uncertain belief rests on independent assessment of utility and probability, and includes envisioning possibilities within its scope. Several researchers working with these premises, independently of one another, arrived at the conclusion that decision is made by highlighting the positive features of the alternative that will be chosen while opposing it to a loosing alternative, whose unpleasant aspects have been stressed. This article frames together contributions from different disciplines, often unknown to one another, with the hope of improving the coordination of research efforts. Furthermore, it discusses the status of the novel theory with respect to our current idea of rationality. |
| Keywords: | Rationality; Shackle; Shafer; Search for Dominant Structure; Differentiation -- Consolidation; Constraint Satisfaction Networks; Construction of Narratives. |
| JEL: | D89 D80 |
| Date: | 2009–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12897&r=exp |