strategic buyers and exclusionary contracts this paper characterizes equilibrium exclusionary contracts between buyers an incumbent firm and a potential entrant when buyers can either vertically integrate or contract with the outside entrant in this setting exclusionary contracts are generally shown to be efficient and to deter inefficient entry that would otherwise occur with multiple unorganized buyers equilibrium contracts are shown to take a divide and conquer form and in some cases to deter some efficient entry in such cases efficient contracting can be restored by a policy that prohibits price discrimination and gives agents free reign to sign exclusionary agreements copyright 1994 by american economic association

anatomy of a contract change we study the productivity impact of a contract change the setting is a tea plantation in india the activity in question is tea plucking the output of which is measurable and contractible payments to pluckers consist of a baseline wage along with piece rates per kilogram kg of output that vary over different production intervals in 2008 a contract change was instituted as part of a customary practice of renegotiation once every three years this plantation represented only a fraction of the negotiating parties which involved representatives from some 20 unions and large plantations operating in the tea growing region with no dominant players on either side of the table negotiations commenced a few months prior to the expiration of the going contract and went through several rounds the new contract increased the baseline wage by approximately 30 percent almost all of this increase was mandated by state government legislation in june 2008 the government announced a preliminary notification under the minimum wages act 1948 setting the minimum daily wage payable to plantation workers in the state at rs 102 us 2 25 the baseline in force in our plantation was at

natural groups and economic characteristics as driving forces of wage discrimination we investigate whether the origin of an employee provides different motives for wage discrimination in gift exchange experiments with students and migrant workers in china in a lab and an internet experiment subjects in the role of employers can condition their wages on the employees home provinces the resulting systematic differences in wages can be linked to natural groups and economic characteristics of the provinces in group favoritism increases wages for employees who share the same origin as the employer while an increased probability of being matched with an employee with a different ethnicity reduces wages furthermore wages in the laboratory increase with the actual wage level in the employees home province nevertheless employees effort is not influenced by these variables only the wage paid in the experiment influences effort

managerial bonuses and subordinate mistreatment abstract can performance bonuses increase the likelihood that managers coerce their subordinates into exerting high levels of effort when doing so promotes neither efficiency nor equity we consider a laboratory setting in which managers compete to obtain a large bonus at the end of the experiment and the probability of obtaining it depends partly on the effort exerted by the subordinates we find that managers are more than twice as likely to punish subordinates exerting fair levels of effort if they compete for individual bonuses than when there are no bonuses this is not the case when they compete for pooled bonuses giving managers discretionary power over how to share them with their subordinates as most subordinates willingly exert maximal effort a model in which individuals are assumed to care about equity captures subordinates behavior well managers willingness to coerce subordinates into exerting unfairly high levels of effort on the other hand cannot be readily accounted for by any of the existing models of social preferences

the impact of group membership on cooperation and norm enforcement evidence using random assignment to real social groups due to incomplete contracts efficiency of an organization depends on willingness of individuals to take non selfish actions such as cooperating when there is no incentive to do so or punishing inefficient actions by others organizations also constitute a social boundary or group we investigate whether this social aspect of organizations has an important benefit fostering unselfish cooperation and norm enforcement within the group but also whether there is a dark side in the form of hostility between groups our experiment provides the first evidence free from the confounding effect of self selection into groups individuals are randomly assigned to different platoons during a four week period of officer training in the swiss army we conduct choice experiments simultaneous prisoner s dilemma games with and without third party punishment in week three random assignment significantly increases willingness to cooperate with fellow platoon members assignment does not lead to hostility in the sense of vindictive punishment of outsiders but does affect norm enforcement enhancing willingness to enforce a norm of cooperation towards fellow platoon members this suggests that the social aspect of organizations motivates efficient behavior even when ordinary incentives fail and helps to explain practices designed to foster social ties or group identification within an organization this abstract was borrowed from another version of this item

gender wage differentials and discrimination in the new south africa research into discrimination within south africa sa has focused on racial issues with gender issues being largely ignored this study aims to estimate gender wage differentials and through decomposition analysis understand the different problems faced by white black coloured and indian asian in 1995 it is found that white and asian females suffer greater gender discrimination than their black and coloured counterparts which could be a signal to future problems black and coloured females may encounter the largest gender wage differential is faced by white females whilst the lowest is encountered by coloured and black females a possible explanation for this finding is the low subsistence wages that the black and coloured population groups command relative to other population groups

fair wages and effort provision combining evidence from a choice experiment and a field experiment the presence of workers who reciprocate higher wages with greater effort can have important consequences for firms and labor markets knowledge about the extent and determinants of reciprocal effort choices is however incomplete we investigate the role of fairness perceptions and social preferences in a field experiment in which workers were hired for a one time job we show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases whereas those who feel adequately paid or overpaid at the base wage do not change their performance moreover we find that only the workers who display reciprocity in a choice experiment show reciprocal effort responses in the field the workers who lack reciprocity in the choice experiment do not respond to the wage increase even if they feel underpaid at the base wage our findings suggest that fairness perceptions and social preferences are key in workers performance response to wage increases in our study the wage increase affects effort mainly through the removal of perceived unfairness i e the elimination of negative reciprocity toward the firm rather than positive reciprocity these results are the first direct evidence of the fair wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature data as supplemental material are available at http dx doi org 10 1287 mnsc 2014 1970 this paper was accepted by uri gneezy behavioral economics

consumer preferences before and after a food safety scare an experimental analysis of the 2010 egg recall in august 2010 more than half a billion eggs were recalled in the u s because of a salmonella outbreak this study examines the effect of the recall with a unique pair of auction experiments investigating willingness to pay wtp for conventional and organic eggs one conducted shortly before and one right after the recall with the same participants in addition to the before and after bids participants bid again after a negative information or balanced information treatment about the event accompanying surveys showed consumers had a high level of awareness of the recall but less knowledge of specific details and viewed information on egg farm conditions as very important in their wtp while there were no significant before and after differences wtp for organic eggs significantly increased in the negative information treatment and balanced information had a positive effect on consumer wtp for conventional eggs

the behavioralist visits the factory increasing productivity using simple framing manipulations recent discoveries in behavioral economics have led to important new insights concerning what can happen in markets such gains in knowledge have come primarily via laboratory experiments a missing piece of the puzzle in many cases is parallel evidence drawn from naturally occurring field counterparts we provide a small movement in this direction by taking advantage of a unique opportunity to work with a chinese high tech manufacturing facility our study revolves around using insights gained from one of the most influential lines of behavioral research framing manipulations in an attempt to increase worker productivity in the facility using a natural field experiment we report several insights for example conditional incentives framed as both losses and gains increase productivity for both individuals and teams in addition teams more acutely respond to bonuses posed as losses than as comparable bonuses posed as gains the magnitude of this framing effect is roughly 1 that is total team productivity is enhanced by 1 purely due to the framing manipulation importantly we find that neither the framing nor the incentive effect lose their significance over time rather the effects are observed over the entire sample period moreover we learn that repeated interaction with workers and conditionality of the bonus contract are substitutes for sustenance of incentive effects in the long run this paper was accepted by gerard p cachon decision analysis

units of measurement and the stone index in demand system estimation the stone index typically used in estimating linear almost ideal demand systems is not invariant to changes in units of measurement which may seriously affect the approximation properties of the model a modification to the stone index or use of a regular price index instead are both desirable practices in estimating linear ai models

partial gift exchange in an experimental labor market impact of subject population differences productivity differences and effort requests on behavior we report a gift exchange experiment firms make wage offers workers respond by determining an effort level higher effort is more costly to workers and firms have no mechanism for punishing or rewarding workers consistent with the gift exchange hypothesis workers provide more effort at higher wages but undergraduates provide substantially less effort than mbas evidence suggests this results from differences in prior work experience firms nonbinding effort requests are at least partially honored resulting in increased overall effort for undergraduates although higher wages are relatively more costly for lower productivity firms workers do not provide them with more effort

relational contracts and the theory of the firm relational contracts informal agreements sustained by the value of future relationships are prevalent within and between firms we develop repeated game models showing why and how relational contracts within firms vertical integration differ from those between nonintegration we show that integration affects the parties temptations to renege on a given relational contract and hence affects the best relational contract the parties can sustain in this sense the integration decision can be an instrument in the service of the parties relationship our approach also has implications for joint ventures alliances and networks and for the role of management within and between firms

anonymous job applications of fresh ph d economists abstract this paper analyzes anonymous job applications of ph d economists in the academic job market we use data on interview invitations from a randomized experiment at a european based research institution results show that the underrepresented gender was hurt by anonymous applications

short run momentum long run mean reversion and excess volatility an elementary housing model abstract we propose an elementary housing model that replicates the key properties of housing bubbles namely short run momentum long run mean reversion and excess volatility we analytically proof that such dynamics can only emerge if homebuyers place sufficient weight on extrapolative expectations

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

identity and the economics of organizations on plebes first day at west point called r day they strip down to their underwear their hair is cut off they are put in uniform they then must address an older cadet with the proper salute and with the statement sir new cadet doe reports to the cadet in the red sash for the first time as ordered plebes must stand and salute and repeat and stand and salute and repeat until they get it exactly right all the while being reprimanded for every tiny mistake in the summary of david lipsky 2003 pp 145 154 who spent four years tracking a company of cadets at west point on r day you surrender your old self in stages but r day is just the beginning of the training and personal re engineering that is to come so that west point graduates emerge four years later as loyal officers in the u s army lipsky shows that despite some failure this tough program is remarkably successful in creating officers with the will to lead in battle economists current picture of organizations and work incentives has no place for the west point program and the motivations it seeks to inculcate in recruits in a standard economic model an individual s preferences are fixed and utility depends only on pecuniary variables the army s aim at west point is to change cadets preferences they wish to inculcate non economic motives in the cadets so that they have the same goals as the u s army alternatively stated the goal of west point is to change the identity of the cadets so they will think of themselves above all else as officers in the u s army they will feel bad about themselves they will lose utility if they fall short of the ideals of such an officer this change in identity

social comparison and effort provision evidence from a field experiment social comparison has potentially far reaching consequences in many economic domains we conducted a field experiment to examine how social comparison affects workers effort provision if their own wage or that of a co worker is cut workers were assigned to groups of two performed identical individual tasks and received the same performance independent hourly wage cutting both group members wages caused a decrease in performance but when only one group member s wage was cut the affected workers decreased their performance more than twice as much as when both workers wages were cut this finding indicates that social comparison among workers affects effort provision because the only difference between the two wage cut treatments is the other group member s wage level in contrast workers whose wage was not cut but who witnessed their group member s pay being cut displayed no change in performance relative to the baseline treatment in which both workers wages remained unchanged this indicates that social comparison exerts asymmetric effects on effort jel c93 j33 m53

a nation of gamblers real estate speculation and american history the great housing convulsion that buffeted america between 2000 and 2010 has historical precedents from the frontier land boom of the 1790s to the skyscraper craze of the 1920s but this time was different there was far less far less real uncertainty about fundamental economic and geographic trends making the convulsion even more puzzling during historic and recent booms sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices the recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices whether for cotton in alabama in 1820 or land in las vegas in 2006 buyers don t appear to be irrational but rather cognitively limited investors who work with simple heuristic models instead of a comprehensive general equilibrium framework low interest rates rarely seem to drive price growth under priced default options are a more common contributor to high prices the primary cost of booms has not typically been overbuilding but rather the financial chaos that accompanies housing downturns

identifying booms and busts in house prices under heterogeneous expectations we introduce heterogeneous expectations in a standard housing market model linking housing rental levels to fundamental buying prices using quarterly data we estimate the model parameters for eight different countries us uk nl jp ch es se and be we find that the data support heterogeneity in expectations with temporary endogenous switching between fundamental mean reverting and trend following chartists beliefs based on their relative performance for all countries we identify temporary house price bubbles amplified by trend extrapolation and crashes reinforced by fundamentalists the qualitative predictions of such non linear models are very different from standard linear benchmarks with important policy implications the fundamental price becomes unstable e g when the interest rate is set too low or mortgage tax deductions too high giving rise to multiple non fundamental equilibria and or global instability

fair wages and effort evidence from a field experiment the presence of workers who reciprocate higher wages with greater effort can have important consequences for firms and labor markets knowledge about the extent and determinants of reciprocal effort choices is however incomplete we investigate the role of fairness perceptions and social preferences in a field experiment in which workers were hired for a one time job we show that workers who perceive being underpaid at the base wage increase their performance if the hourly wage increases whereas those who feel adequately paid or overpaid at the base wage do not change their performance moreover we find that only the workers who display reciprocity in a choice experiment show reciprocal effort responses in the field the workers who lack reciprocity in the choice experiment do not respond to the wage increase even if they feel underpaid at the base wage our findings suggest that fairness perceptions and social preferences are key in workers performance response to wage increases in our study the wage increase affects effort mainly through the removal of perceived unfairness i e the elimination of negative reciprocity toward the firm rather than positive reciprocity these results are the first direct evidence of the fair wage effort hypothesis in the field and also help interpret previous contradictory findings in the literature

gift giving and worker productivity evidence from a firm level experiment abstract we present results from a field experiment designed to measure worker response to a monetary gift from their employer the experiment took place inside a tree planting firm paying its workforce incentive contracts firm managers told a crew of tree planters they would receive a pay raise for one day as a result of a surplus not attributable to past planting productivity we compare planter productivity the number of trees planted per day on the day the gift was handed out with productivity on previous and subsequent days of planting on the same block and thus under similar planting conditions we find direct evidence that the gift had a significant and positive effect on daily planter productivity controlling for planter fixed effects weather conditions and other random daily shocks

peers at work we study peer effects in the workplace specifically we investigate whether how and why the productivity of a worker depends on the productivity of coworkers in the same team using high frequency data on worker productivity from a large supermarket chain we find strong evidence of positive productiv ity spillovers from the introduction of highly productive personnel into a shift worker effort is positively related to the productivity of workers who see him but not workers who do not see him additionally workers respond more to the presence of coworkers with whom they frequently interact we conclude that social pressure can partially internalize free riding externalities that are built into many workplaces jel j24 l81 m54

a model of a team contest with an application to incentives under list proportional representation abstract we develop a model of a team contest for multiple indivisible prizes team members exert costly effort to improve their team s success we analyze two intrateam allocation rules under a list rule prizes are allocated according to a predetermined list under an egalitarian rule prizes are allocated according to a fair lottery we show that which allocation rule maximizes team success depends on the degree of complementarity between members efforts and the convexity of the individual cost of effort function we then apply the model to the context of elections under proportional representation with both open and closed lists we derive conditions under which closed lists generate stronger incentives than open lists our results offer a rationale for the lack of evidence on the negative incentive effects of closed lists

incentives and discrimination optimal incentive mechanisms may require that agents are rewarded differentially even when they are completely identical and are induced to act the same we demonstrate this point by means of a simple incentive model where agents decisions about effort exertion is mapped into a probability that the project will succeed we give necessary and sufficient conditions for optimal incentive mechanisms to be discriminatory we also show that full discrimination across all agents is required if and only if the technology has increasing return to scale in the non symmetric framework we show that negligible differences in agents attributes may result in major differences in rewards in the unique optimal mechanism this abstract was borrowed from another version of this item

implicit contracts incentive compatibility and involuntary unemployment this paper considers the enforceability of employment contracts when employees performance cannot be verified in court so that piece rate contracts are not legally enforceable part i shows that there exists a variety of self enforcing implicit contracts modelled as perfect equilibria in a repeated game and characterizes all the wage and performance outcomes that can be implemented implementation requires a strictly positive surplus from employment the form of the contract depending on how this surplus is divided between firm and employee piece rate contracts and contracts with an informally agreed bonus can be made self enforcing but the use of severance pay and bonding does not extend the set of implementable allocations the resulting contracts resemble actual labor contracts more than do the contracts in standard principal agent models part ii analyses market equilibrium with these contracts also modelled as perfect equilibria in a repeated game and shows that many such equilibria exist unfilled vacancies and unemployed workers can co exist despite the existence of contracts that are potentially mutually beneficial for those jobs that are filled any division of the potential surplus is possible so that the market can have at the same time involuntary unemployment and vacancies that are unfilled despite filled jobs earning positive profits as a criterion for selecting equilibria a notion of renegotiation proofness is applied then either all workers are employed or all jobs filled but any division of the potential surplus is still possible the paper explores what further restrictions on beliefs give rise to a walrasian outcome in which all the potential surplus goes to the short side of the market and to an efficiency wage type outcome in which the potential surplus goes to the long side

monopoly pricing with network externalities abstract how should a monopolist price a durable good or a new technology that is subject to network externalities in particular should the monopolist set a low introductory price to attract a critical mass of adopters in this paper we provide intuition as to when and why introductory pricing might occur in the presence of network externalities incomplete information about demand or asymmetric information about costs is necessary for introductory pricing to occur in equilibrium when consumers are small

are emily and greg more employable than lakisha and jamal a field experiment on labor market discrimination we study race in the labor market by sending fictitious resumes to help wanted ads in boston and chicago newspapers to manipulate perceived race resumes are randomly assigned african american or white sounding names white names receive 50 percent more callbacks for interviews callbacks are also more responsive to resume quality for white names than for african american ones the racial gap is uniform across occupation industry and employer size we also find little evidence that employers are inferring social class from the names differential treatment by race still appears to still be prominent in the u s labor market jel j71 j64

wage subsidies and fair wages abstract wage subsidies can be provided directly to the worker or indirectly by subsidizing the employer with reduced cost of labor employers offer higher wages the standard literature stipulates that this statutory incidence bears no implications for the economic incidence we propose and test a mechanism by which indirect subsidies lead to higher social welfare studies show that workers reciprocate higher wages with higher effort indirect subsidies are shifted to the workers as higher wages leading workers to reciprocate with higher effort and productivity a controlled laboratory experiment supports our behavioral hypotheses and confirms the behavioral and welfare implications

social motives in intergroup conflict group identity and perceived target of threat we experimentally test the social motives behind individual participation in intergroup conflict by manipulating the perceived target of threat groups or individuals and the symmetry of conflict we find that behavior in conflict depends on whether one is harmed by actions perpetrated by the out group but not on one s own influence on the outcome of the out group the perceived target of threat dramatically alters decisions to participate in conflict when people perceive their group to be under threat they are mobilized to do what is good for the group and contribute to the conflict on the other hand if people perceive to be personally under threat they are driven to do what is good for themselves and withhold their contribution the first phenomenon is attributed to group identity possibly combined with a concern for social welfare the second phenomenon is attributed to a novel victim effect another social motive reciprocity is ruled out by the data

in search of workers real effort reciprocity a field and a laboratory experiment we present a field experiment to assess the effect of own and peer wage variations on actual work effort of employees with hourly wages work effort neither reacts to an increase of the own wage nor to a positive or negative peer comparison this result seems at odds with numerous laboratory experiments that show a clear own wage sensitivity on effort in an additional real effort laboratory experiment we show that explicit cost and surplus information that enables an exact calculation of an employer s surplus from the work contract is a crucial prerequisite for a positive wage effort relation this demonstrates that an employee s reciprocity requires a clear assessment of the surplus at stake jel c91 c92 j41

work environment and individual background explaining regional shirking differentials in a large italian firm the prevalence of shirking within a large italian bank appears to be characterized by significant regional differentials in particular absenteeism and misconduct episodes are substantially more prevalent in the south we consider a number of potential explanations for this fact different individual backgrounds group interaction effects sorting of workers across regions differences in local attributes different hiring policies and discrimination against southern workers our analysis suggests that individual backgrounds group interaction effects and sorting effects contribute to explaining the north south shirking differential none of the other explanations appears to be of first order importance i introduction whether individual behavior is determined by group interactions or by individual background is undoubtedly a fundamental question for the social sciences this question presented itself forcefully when we stumbled onto the following piece of evidence there appear to be significant regional differentials in the prevalence of shirking among the employees of a large italian bank in particular absenteeism and misconduct episodes are considerably more frequent in the southern branches of the bank in this paper we examine several potential explanations for this fact first individual preferences for shirking versus working may differ according to one s region of hirth we will refer to this hj othesis as one of different individual hackgrounds the second possibility is one of locational sorting low shirking types may tend to migrate to the north high shirking types may tend to migrate to the south or hoth third the northern and southern

the gender salary gap in british academia this paper considers salary determination and the gender salary gap in the academic labour market utilizing a particularly detailed data set of academics from five old established universities results reveal an aggregate gender salary differential for academic staff of 15 most of this differential can however be explained by our model evidence suggests a limited opportunity for female academics to combine career and family despite the flexibility of an academic job and emphasizes the importance of mobility to the male career publication record is found to be an important determinant of salary

school spirit legislator school ties and state funding for higher education abstract we explore a new mechanism to understand state funding for public colleges and universities by leveraging data on the educational experiences of state legislators specifically if and where they received postsecondary education using novel hand collected data from 2002 through 2014 we provide comprehensive documentation for the first time in the literature on the educational backgrounds of state legislators we find a statistically significant positive association between the share of legislators who attended their states public institutions and state funding for their entire public higher education system we also find a similar positive relationship between the share of state legislators who attended particular campuses of the state s public university system and funding for those campuses this relationship is more pronounced among publicly educated legislators who represent legislative districts close to their alma mater s district and becomes most consequential when the legislator s district contains his or her alma mater we discuss the implications of our findings for academic studies on how politics and legislators personal experiences influence support for higher education

part time work and the hiring of older workers this research uses german establishment data to examine the relationship between back loading compensation the hiring of older workers and their part time status we confirm that establishments that defer compensation are less likely to hire older workers we demonstrate for the first time that establishments that defer compensation are more likely to limit older workers to part time jobs when they do hire them thus deferred compensation plays a larger role in reducing the chances of older workers being hired into full time jobs than would be inferred from past estimates simply examining their odds of being hired at all

summits riots and media attention the political economy of information on trade and globalisation supply of information has increased rapidly through the growth of commercial media and technological innovations yet economists still blame anti globalists demonstrations and public opposition to trade liberalisation on poor information this paper analyses how the structure of the media industry affects the distribution of information on trade policy and globalisation we present an empirical analysis of belgian media reporting on trade policy and globalisation over the 1999 2002 period supports these hypotheses and finds strong negative bias in media coverage moreover we find that media coverage of trade policy and globalisation is highly concentrated around summit meetings of political leaders media attention in the popular press is heavily influenced by riots and demonstrations at summits the paper points at important implications for public information on trade policy and globalisation and for economists

the labor supply of fixed wage workers estimates from a real effort experiment abstract fixed wage workers comprise the bulk of the labor force and yet little is known about how they respond to changes in their wage given recent interest in theories of reciprocity and intrinsic motivation and their implications for effort provision the neoclassical prediction seems less obvious today to better understand the motivation of these workers i estimate their labor supply using a real effort experiment two results stand out first no one theory seems to fit the pooled data on average people work considerably harder than the minimum but they do not respond to changes in the wage second pooling the data is deceptive because there seem to be distinct types with differing responses to the wage most workers can be classified as reciprocal or intrinsically motivated and indeed these types respond as theory would predict reciprocators return wage gifts with increased effort and extrinsic incentives crowd out motivation for intrinsic workers

insiders and outsiders in wage determination a firm starts with a group of insiders or seasoned workers there is also a large pool of outsiders who are initially less productive but are transformed into insiders after one period of employment the firm gains from having a large pool of insiders some of whom may be laid off in bad years insiders gain from keeping their numbers small if the insiders set their wage unilaterally they will choose a path that in this extreme case prevents employment of outsiders even if future employment prospects are good if the wage path is set by bilateral bargaining the extra advantage to the firm permits employment of some outsiders in some situations

gift exchange in a multi worker firm one of the main findings of a large body of gift exchange experiments is that in an incomplete contracts environment workers on average do not shirk and usually provide more than the minimum enforceable effort level in general 40 to 60 percent of the workers reward higher wages with higher effort these results are observed for simple one employer one worker relationships in this paper we investigate whether they generalize to the more realistic situation in which the employer employs several workers we compare a bilateral gift exchange game with a treatment in which each employer has four workers we find that effort levels in the latter treatment are only marginally lower gift exchange thus appears to be robust to increases in the size of the workforce and intention based reciprocity rather than social preferences seems to be the main driving force behind gift exchange

monitoring motivation and management the determinants of opportunistic behavior in a field experiment economic models of incentives in employment relationships are based on a specific theory of motivation employees are rational cheaters who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs we investigate the rational cheater model by observing how experimentally induced variation in monitoring of telephone call center employees influences opportunism a significant fraction of employees behave as the rational cheater model predicts a substantial proportion of employees however do not respond to manipulations in the monitoring rate this heterogeneity is related to variation in employee assessments of their general treatment by the employer jel d2 j2 l2 l8 m12

principals preferences for agents with social preferences abstract this study explores a nested representation of ethical moral social identity motivated opportunistic and reciprocal agent preferences to characterize screening contracts in a principal agent model under adverse selection this leads to a ranking of the type of social preferences that principals should seek in agents based upon the information rents associated with each agent type when moral hazard is introduced the ranking further depends upon the interaction of limited liability with self selection these results are interpreted in light of the 2010 dodd frank act and principal agent experiments

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

a fresh meat almost ideal demand system incorporating negative tv press and advertising impact abstract this paper investigates fresh meat consumption in belgium during 1995 1998 through the specification of a three equation almost ideal demand system aids incorporating a media index of tv coverage and advertising expenditures as explanatory variables estimated parameters and elasticity coefficients are plausible and consistent with demand theory own price elasticities are relatively low indicating a low fresh meat demand sensitivity to price changes over this period which was dominated by mass media reports about the potential health risks associated with meat consumption the scope of the paper extends beyond the estimation of elasticity coefficients and includes the specification of a media index and simulations that provide insights into the impact of negative press relative to advertising efforts specifically the impact of television publicity is shown to have been particularly negative on beef veal expenditures in favour of pork mixture this finding corroborates expectations since mass media issues mainly pertained to bse mad cow disease and hormone residues during the investigated period with relatively little effort being undertaken and with its current strategy fresh meat advertising is found to have only a minor impact compared with negative press

the many faces of human sociality uncovering the distribution and stability of social preferences there is vast heterogeneity in the human willingness to weigh others interests in decision making this heterogeneity concerns the motivational intricacies as well as the strength of other regarding behaviors and raises the question how one can parsimoniously model and characterize heterogeneity across several dimensions of social preferences while still being able to predict behavior over time and across situations we tackle this task with an experiment and a structural model of preferences that allows us to simultaneously estimate outcome based and reciprocity based social preferences we find that non selfish preferences are the rule rather than the exception neither at the level of the representative agent nor when we allow for several preference types do purely selfish types emerge instead three temporally stable and qualitatively different other regarding types emerge endogenously i e without pre specifying assumptions about the characteristics of types when ahead all three types value others payoffs significantly more than when behind the first type which we denote as strongly altruistic type is characterized by a relatively large weight on others payoffs even when behind and moderate levels of reciprocity the second type denoted as moderately altruistic type also puts positive weight on others payoff yet at a considerable lower level and displays no positive reciprocity while the third type is behindness averse i e puts a large negative weight on others payoffs when behind and behaves selfishly otherwise we also find that there is an unambiguous and temporally stable assignment of individuals to types moreover the three type model substantially improves the out of sample predictions of individuals behavior across additional games while the information contained in subject specific parameter estimates leads to no or only minor additional predictive power this suggests that a parsimonious model with three types captures the bulk of the predictive power contained in the preference estimates

dynamic monopoly pricing with network externalities abstract in this paper we study the optimal dynamic monopoly pricing for a good which exhibits positive network externalities when network externalities are of sufficient magnitude we show that contrary to the coase theorem 1 there is no time inconsistency problem 2 subgame perfect equilibrium prices increase as time passes from this point of view positive network externalities allow the monopoly to commit itself credibly to increasing future prices ce papier etudie la tarification optimale intertemporelle d un monopole qui vend un bien exhibant des externalites positives de reseau lorsque ces externalites sont suffisamment importantes nous montrons que contrairement au theoreme de coase 1 il n y a pas de probleme d incoherence temporelle 2 les prix d equilibre parfait croissent avec le temps de ce point de vue les externalites positives de reseau permettent au monopole de s engager crediblement sur une politique de prix futurs a la hausse

the sports business as a labor market laboratory with superior data on compensation and productivity as well as the occurrence of abrupt dramatic market structure and player allocation rules changes sports labor markets offer an excellent setting in which to test economic hypotheses this paper reviews evidence from sports in four areas employer monopsony discrimination the coase theorem and incentive contracts supervision and performance there is considerable evidence of monopsony as well as for the existence of some forms of discrimination against minority athletes incentive contracts have strong effects on player performance and behavior and there is mixed evidence on the predictions of the coase theorem

toward an economic theory of leadership leading by example this paper explores leadership within organizations leadership is distinct from authority because following a leader is a voluntary rather than coerced activity of the followers this paper considers how a leader induces rational agents to follow her in situations when the leader has incentives to mislead them copyright 1998 by american economic association

social identity and preferences social identities prescribe behaviors for people we identify the marginal behavioral effect of these norms on discount rates and risk aversion by measuring how laboratory subjects choices change when an aspect of social identity is made salient when we make ethnic identity salient to asian american subjects they make more patient choices when we make racial identity salient to black subjects non immigrant blacks but not immigrant blacks make more patient choices making gender identity salient has no effect on intertemporal or risk choices

why beauty matters we decompose the beauty premium in an experimental labor market where employers determine wages of workers who perform a maze solving task this task requires a true skill which we show to be unaffected by physical attractiveness we find a sizable beauty premium and can identify three transmission channels a physically attractive workers are more confident and higher confidence increases wages b for a given level of confidence physically attractive workers are wrongly considered more able by employers c controlling for worker confidence physically attractive workers have oral skills such as communication and social skills that raise their wages when they interact with employers our methodology can be adopted to study the sources of discriminatory pay differentials in other settings

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

sex discrimination in restaurant hiring an audit study in an audit study of sex discrimination in hiring comparably matched pairs of men and women applied for jobs as waiters and waitresses at restaurants in philadelphia in high price restaurants where earnings are higher job applications from women had an estimated probability of receiving a job offer that was lower by about 0 4 and an estimated probability of receiving an interview that was lower by about 0 35 both estimated differentials are statistically significant additional evidence suggests that customer discrimination partly underlies the hiring discrimination

evidence on discrimination in employment codes of color codes of gender there is substantial racial and gender disparity in the american economy as we will demonstrate discriminatory treatment within the labor market is a major cause of this inequality the evidence is ubiquitous careful research studies that estimate wage and employment regressions help wanted advertisements audit and correspondence studies and discrimination suits that are often reported by the news media yet there appear to have been periods of substantial reductions in economic disparity and discrimination for example donohue and heckman provide evidence that racial discrimination declined during 1965 1975 1 gottschalk has produced statistical estimates that indicate that discrimination against black males dropped most sharply between 1965 and 1975 and that discrimination against women declined during the interval 1973 1994 2 but some unanswered questions remain why did the movement toward racial equality stagnate and eventually decline after the mid 1970s what factors are most responsible for the remaining gender inequality what is the role of the competitive process in the elimination or reproduction of discrimination in employment

field experiments of discrimination in the market place controlled experiments using matched pairs of bogus transactors to test for discrimination in the marketplace have been conducted for over 30 years and have extended across 10 countries significant persistent and pervasive levels of discrimination have been found against non whites and women in labour housing and product markets rates of employment discrimination against non whites in excess of 25 have been measured in australia europe and north america a small number of experiments have also investigated employment discrimination against the disabled in britain and the netherlands and against older applicants in the united states

coordination and discrimination in contracting with externalities divide and conquer abstract the paper studies bilateral contracting between n agents and one principal whose trade with each agent generates externalities on other agents it examines the effects of prohibiting the principal from i coordinating agents on her preferred equilibrium and ii making different contracts available to different agents these effects depend on whether an agent is more or less eager to trade when others trade more the prohibitions reduce the aggregate trade in the former case and have little or no effect in the latter case the inefficiencies under different contracting regimes are linked to the sign of the relevant externalities and are shown to be typically reduced by both prohibitions

does food safety information impact u s meat demand a theoretical model of consumer response to publicized food safety information on meat demand is developed with an empirical application to u s meat consumption evidence is found for the existence of pre committed levels of consumption seasonal factors time trends and contemporaneous own and cross commodity food safety concerns the average demand response to food safety concerns is small especially in comparison to price effects and to previous estimates of health related issues this small average effect masks periods of significantly larger responses corresponding with prominent food safety events but these larger impacts are short lived with no apparent food safety lagged effects on food safety concerns in the united states have dramatically increased in the past decade with regard to incidences of contaminated meat products concerns have arisen because contaminated meat products can result in serious risk to the well being and health of consumers contamination comes from a myriad of sources including but not limited to outbreaks of listeria monocytogenes escherichia coli e coli and salmonella centers for disease control and prevention food safety problems are not isolated to the united states as other unsafe contaminates in meats have emerged across the world including highly publicized outbreaks of bovine spongiform encephalopathy bse in europe the potential impacts of publicized food safety events on consumer s demand for meat products in the united states include own effects on the demand for the contaminated meat involved as well as cross effects impacting the demand for other meats the objective of this article is to investigate whether publicized food safety concerns surrounding beef pork and poultry chicken and turkey have impacted meat consumption food safety indices are constructed separately for beef pork and poultry

naked exclusion comment the ability of an incumbent firm to deter entry by writing exclusionary contracts with customers has been a subject of contention in the antitrust literature the courts concern with such exclusionary contracts has been challenged by those who argue that an incumbent faced with buyers whose interest is to promote entry and competition would have to pay buyers more for the inclusion of exclusionary provisions than it could possibly gain from exclusion in a provocative article eric b rasmusen et al 1991 henceforth rrw have argued that an incumbent may in fact be able to exclude rivals profitably using such contractual provisions because it can exploit buyers lack of coordination in essence if buyers expect other buyers to sign such provisions then they may see little reason not to do so themselves the rrw argument is potentially an important one because most alleged instances of entry deterrence through exclusionary contracts with customers occur in situations with multiple buyers unfortunately however rrw s two main results contain errors in this note we reconsider the rrw model providing correct characterizations of the likelihood and cost of exclusion for an incumbent firm our results indicate that while the intuition suggested by rrw is valid the equilibrium likelihood and cost of exclusion differ from what rrw derive moreover our analysis illuminates some further aspects of exclusionary contracting with multiple buyers among these issues we focus on how an incumbent can use discriminatory offers to exploit the externalities that exist among buyers in the provision of competition in section i we review the basic assumptions of the rrw model in sections ii and iii we then consider in turn the cases of simultaneous and sequential offers studied by rrw for the simultaneous model we distinguish between settings in which the incumbent can and cannot discriminate in its offers to different buyers this distinction is the source of the problem in rrw s analysis their simultaneous offer model assumes no discrimination but the proof of their proposition 2 assumes at times that discrimination is feasible we show that absent the ability to discriminate the incumbent can exclude profitably only when buyers fail to coordinate on their most preferred continuation equilibrium in contrast we show that when discrimination is possible the incumbent need not rely on a lack of buyer coordination to segal department of economics landau building stanford university stanford ca 94305 e mail ilya segal stanford edu whinston department of economics northwestern university 2003 sheridan road evanston il 60208 e mail mwhinston nwu edu we thank eric rasmusen john wiley and participants in the berkeley stanford iofest the university of copenhagen vertical restraints conference and a seminar at the antitrust division of the u s department of justice for helpful comments we thank federico echenique for excellent research assistance 1 for example a recent department of justice investigation concerned the use of exclusive contracts by the leading provider of computerized ticketing services ticketmaster most major cities have several large concert sports venues in many cities ticketmaster has exclusive contracts with a very large share of these venues 2 the other leading response to the argument that contracts with buyers cannot be a profitable method of exclusion is given in philippe aghion and patrick bolton 1987 section i one factor limiting the applicability of the aghion and bolton theory however is that it involves partial exclusion the contracts signed are not fully exclusionary they involve finite stipulated damages and the profitability of the strategy arises from extracting rents from an entrant when entry occurs indeed in the aghion and bolton model contracts that fully exclude offer no benefits over writing no contract at all in section iii of their paper aghion and bolton also discuss a two buyer version of their model in which externalities arise across buyers in contrast to the analysis here and in rrw they allow the incumbent to make an offer to a buyer i that is conditional on the acceptance decision of the other buyer 3 r innes and r j sexton 1994 also discuss the use of discriminatory offers in the context of a model in which buyers can form coalitions with the entrant

do the skilled and prime aged unemployed benefit more from training effect heterogeneity of public training programs in germany this study analyses the treatment effects of public training programmes for the unemployed in germany based on propensity score matching methods we extend the picture that has been sketched in previous studies by estimating the treatment effects of medium term programmes for different skill and age groups our results indicate that programme participation has a positive impact on employment probabilities and earnings for almost all sub groups we find little evidence for the presence of heterogeneous treatment effects and the magnitude of the differences is quite small our results thus at least in part conflict with the strategy to provide training increasingly to individuals with better employment prospects

identity supervision and work groups i want to tell my foreman to f off but i can t so says mike a steel handler we meet in stud terkel s book working 1974 xxxv many workers stories we read in working and in ethnographies suggest workers greatly resent supervision as a result they exert lower effort and may sabotage production mike puts dents in the steel ethnographies also reveal workers who are not strictly monitored develop work group output norms this paper uses the con cept of identity to study trade offs in supervi sory policy 1 we follow the social psychology literature and examine intrinsic incentives that depend on how workers see themselves in rela tion to the firm when a supervisor monitors workers workers adopt an identity in opposition to the firm the firm gains information and can fine tune its incentive pay but resentful workers require high compensation to work in the firm s interest with no monitoring workers are less hostile to the firm but they may forge a work group identity with norms that restrict output we show that a firm may find it profitable to have lax supervision when workers take on a work group identity the cost per unit of effort can be lower than when workers view them selves in opposition to the firm we shall present the model and then discuss some classic studies of workplaces that portray these trade offs our identity framework synthesizes an emerg ing body of economic theory and empirics on incentives and monitoring e g bruno frey 1993 gary charness 2000 daniel s nagin et al 2002 michael t rauh and giulio seccia 1 this paper provides a simple formal model of tradeoffs described loosely in akerlof and kranton 2005 we also discuss further implications of supervision versus work group cohesion

motivation and markets many workers receive pay based on subjectively assessed performance yet the shirking model of efficiency wages excludes it this paper incorporates such pay with the following results performance pay is more efficient than efficiency wages when the costs of having a job vacant are low and qualified workers in short supply more capital intensive industries pay more than less capital intensive industries as observed in studies of interindustry wages differentials sustaining an efficient outcome requires a social convention similar to the notion of a fair wage the model also makes predictions about the relationship between turnover wages growth and unemployment copyright 1998 by american economic association

media coverage of biotech foods and influence on consumer choice in the last two decades few issues in the global agrifood sector have attracted as much media attention as biotechnology thousands of brief and in depth articles have been written focusing on diverse issues from the spectacle of ecological disasters to the promise of feeding a burgeoning world population among those accounts of alleged health risks could influence consumer perceptions and behavior directly indeed reporters across the globe have continued to draw parallels between biotechnology and other known food hazards such as mad cow disease and chemical contaminants such as dioxin they have also continued to raise the possibility of unknown long term health effects essentially framing biotechnology as a food safety risk marks and kalaitzandonakes marks et al there is evidence that this broad and often negative media coverage of biotechnology has raised public awareness influenced public perceptions and altered the public agenda on biotech foods in europe and elsewhere bauer durant bauer and gaskell this is not surprising as over 90 of consumers receive information about agrifood biotechnology primarily through the popular press and television hoban and kendall despite the apparent influence of media coverage on public perceptions however the question of whether such coverage has also affected consumer purchasing behavior has not been answered the answer to this question is broadly relevant with less than 2 of the u s population now engaged in agricultural production the average food consumer has diminishing personal experience and knowledge of agriculture

anti social behavior in profit and nonprofit organizations abstract two types of intrinsically motivated workers are considered good workers care about the mission of an organization whereas bad workers derive pleasure from destructive behavior compared to the case with only good motivated workers the mission oriented sector has to resort to higher monitoring to deter bad workers from entering the sector in equilibrium bad workers work in the for profit sector where they behave like normal people while good workers self select into the mission oriented sector in the profit oriented sector both monitoring and bonus payments for good behavior increase to control the damage caused by bad workers the results of the paper are illustrated by examples from child care and the threat posed by pedophiles in this sector

preferences intentions and expectation violations a large scale experiment with a representative subject pool we specify and estimate an econometric model which separately identifies the effects of distributional preferences and penalizing unfair proposer behavior perceived intentions on responder decisions in the ultimatum game we allow the effects of perceived intentions to depend among other things on the subjective probabilities responders attach to the possible offers the latter allows expectation violations to be a driving force for responder behavior we estimate the model on a large representative sample from the dutch population we find that the relative importance of distributional preferences and perceived intentions depends significantly on the socio economic characteristics of responders strong inequity aversion to the other player s disadvantage is found for lower educated and older respondents responders tend to punish more unequal offers made by proposers if they expect that unequal proposals are made less often

gift exchange in the workplace addressing the conflicting evidence with a careful test tests of gift exchange wherein agents receive excess wages which are noncontingent on performance in one shot settings have yielded contradictory evidence they sometimes find effort boosts consistent with gift exchange whereas they sometimes find no effort increases consistent with a standard model we identify eight confounds that could have led to the mixed evidence agent disutility from being viewed as selfish small samples insufficient wage raises an effort ceiling fatigue selection of abler workers reemployment concerns and peer effects and run a comprehensive test addressing them our test consisted of a field experiment hiring workers for a data entry job followed by laboratory games assessing their prosocial behavior after addressing these confounds we find that behavior during the field test was consistent with a standard model workers did not repay fixed wage raises with an effort boost but they did raise effort in response to a piece rate the piece rate scheme was also more e

identity and schooling some lessons for the economics of education abstract this review culls noneconomic literature on education by sociologists anthropologists and practitioners to present a new economic theory of students and schools this theory elaborates two themes that have eluded economic analysis first is the student as decision maker whose primary motivation is her identity second is a conception of the school as a social institution this framework suggests a new perspective on questions such as resource allocation and school reform it explains why some educational policies succeed and others fail we show how sociological variables may affect outcomes and suggest ways economists can incorporate them into theoretical and empirical research

toward an understanding of the welfare effects of nudges evidence from a field experiment in the workplace social scientists have recently explored how framing of gains and losses affects productivity we conducted a field experiment in peri urban uganda and compare output levels across 1000 workers over isomorphic tasks and incentives framed as either losses or gains we find that loss aversion can be leveraged to increase the productivity of labor the estimated welfare costs of using the loss contract are quite modest perhaps because the loss contract is viewed as a soft commitment device

gmo standards endogenous policy and the market for information the paper develops a composite index of gmo standards restrictiveness for 60 countries assigning objective scores to six different regulatory dimensions using this index and its components we empirically investigate the political and economic determinants of gmo regulations for 55 countries controlling for spatial autocorrelation results show that many of the determinants highlighted in the theoretical literature such as the structure of the agricultural sector and the institutional environment are important determinants of the restrictiveness of the gmo regulation as a key result there emerges a prominent role of the market for information showing that the structure of domestic mass media public vs private is an important driver of gmo standards

leveraging upfront payments to curb employee misbehavior evidence from a natural field experiment abstract we use a natural field experiment in which we hired over 2000 workers from an online labor market to explore how upfront payment affects worker motivation and misbehavior on the job we start with a simple theory that shows paying upfront can increase misbehavior through reducing the perceived costs of cheating but it can decrease misbehavior through generating a gift exchange effect motivated by the theory we designed a task that provided workers with opportunities to reciprocate or misbehave a unique aspect of our design is that we are permitted an opportunity to measure the curvature of the gift exchange value of the upfront payment our results suggest paying workers upfront induces a gift exchange effect that is concave in the share of total wage paid upfront moreover the impact is strong enough to suggest that small upfront payments are a cost effective means for an employer to curb employee misbehavior

the timing of discretionary bonuses effort signals and reciprocity abstract in a real effort experiment we investigate the relationship between reciprocity and the timing of discretionary bonuses in a two period principal agent manager worker setting we vary the timing of the manager s bonus decision in order to examine two main channels reward and trust through which discretionary bonuses may operate average worker performance improves when bonus decisions are made between the two periods since both channels are simultaneously active first period output significantly increases as workers attempt to signal their trustworthiness to managers when the bonus decision is made upfront or at the end average output is no different than in a baseline setting without the bonus mechanism furthermore output after a bonus is not paid decreases substantially consistent with negative reciprocity our main findings are reinforced by using time spent on the available real leisure activity as an alternative measure of subjects effort

gender discrimination in job ads evidence from china we study explicit gender discrimination in a population of ads on a chinese internet job board gender targeted job ads are common favor women as often as men and are much less common in jobs requiring higher levels of skill employers relative preferences for female versus male workers on the other hand are more strongly related to the preferred age height and beauty of the worker than to job skill levels almost two thirds of the variation in advertised gender preferences occurs within firms and one third occurs within firmoccupation cells overall these patterns are not well explained by a firm level animus model by a glass ceiling model or by models in which broad occupational categories are consistently gendered across firms instead the patterns suggest a model in which firms have idiosyncratic preferences for particular job gender matches which are overridden in skilled positions by factors such as thinner labor markets or a greater incentive to search broadly for the most qualified candidate jel codes j16 j63 j71 copyright 2013 oxford university press

reciprocity under brief and long time delays we report the results from three experiments embedded in the same overarching design which extends the gift exchange paradigm for the study of worker employer relationships we focus on the effect of the length of the delay between the time at which workers learn their wage and when they choose an effort level on the relationship between wage and effort we compare effort choices made within a few hours with those made several weeks afterward we find that the strength of the wage effort relationship decreases over time and this change appears to be driven by workers who receive low wages jel c91 j33 m52

an empirical study of age discrimination in norway and germany using a questionnaire and a sample of students and personnel managers we establish the existence of age discrimination in the hiring process in germany and norway as expected age discrimination is more prominent in germany where the hiring probability of equally qualified applicants is reduced by about 22 percentage points due to an age differential of 14 years as opposed to only 12 percentage points in norway within both countries the tendency to discriminate does not differ between students and personnel managers and does not depend on the age of the decision maker the phenomenon of unemployment among older workers is characterized less by the risk of becoming unemployed than by the problem of remaining unemployed and failing to find new work frerichs and naegele 1998 p 59

utilitarianism and horizontal equity the case for random taxation this paper establishes that far from being able to derive the principle of horizontal equity from utilitarianism the principle is actually in consistent with utilitarianism in a variety of circumstances we derive conditions under which a it is optimal to impose random tax schedules ex post randomization and b it is optimal to randomize the tax schedules imposed on a set of otherwise identical individuals ex ante randomization the implications for optimal tax theory are discussed more generally it is shown that there are a number of potentially important economic situations with which the principle of horizontal equity may be inconsistent not only with utilitarianism but even with pareto optimality this abstract was borrowed from another version of this item

reference points and effort provision a key open question for theories of reference dependent preferences is what determines the reference point one candidate is expectations what people expect could affect how they feel about what actually occurs in a real effort experiment we manipulate the rational expectations of subjects and check whether this manipulation influences their effort provision we find that effort provision is significantly different between treatments in the way predicted by models of expectation based reference dependent preferences if expectations are high subjects work longer and earn more money than if expectations are low

timing of kindness evidence from a field experiment abstract we conduct a field experiment in a naturally occurring labor environment and track whether the performance of workers responds to unexpected wage increases specifically we investigate how the timing of wage increases affects efforts we find that workers performance is substantially higher for the same total wage when their wage is increased in two steps as opposed to a single increase at the outset moreover workers are more honest and are more willing to do voluntary extra work after surprising wage increases compared to a baseline condition without increases

do wage cuts damage work morale evidence from a natural field experiment employment contracts are often incomplete leaving many responsibilities subject to workers discretion high work morale is therefore essential for sustaining voluntary cooperation and high productivity in firms we conducted a field experiment to test whether workers reciprocate wage cuts and raises with low or high work productivity wage cuts had a detrimental and persistent impact on productivity reducing average output by more than 20 percent an equivalent wage increase however did not result in any productivity gains the results from an additional control experiment with high monetary performance incentives demonstrate that workers could still produce substantially more output leaving enough room for positive reactions altogether these results provide evidence consistent with a model of reciprocity as opposed to inequality aversion

the impact of food scares on price adjustment in the uk beef market abstract this paper considers the impact of food scares predominately concerns relating to bse on uk beef prices at retail wholesale and producer levels over the 1990s acknowledging the co movement that exists between prices in the meat marketing chain we use a co integrating framework the results of which show the importance of publicity regarding the safety of food in the transmission of beef prices in the uk the food publicity index that we use has a marked negative impact on the prices at all levels a result that is consistent with the effect of an inward shift in the demand function moreover the extent of price decline varies between the marketing stages entailing that the price spreads rise in response to an increase in the negative publicity about food safety while not a formal test of market power these observations are consistent with recent theoretical results demonstrating that market power exacerbates price changes in the upstream sectors for a given change in the retail demand function the implication of these varying price changes is that the food safety concerns also cause the marketing margins between the stages to widen the uk s competition commission has recently investigated the abuse of market power in the food sector inspired largely by this specific issue