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The Intrinsic Value of Decision Rights

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  • Björn Bartling
  • Ernst Fehr
  • Holger Herz

Abstract

Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal – at least partly – from an assumed positive intrinsic value of decision rights. Proving the existence of this value and measuring its size, however, is intricate. Here, we develop an experimental method capable of achieving these goals. The data reveal that – across different parameterizations – the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The existence of an intrinsic value of decision rights helps understand the allocation of decision rights in practice, and it has implications for their optimal allocation in organizations, economic institutions, and society at large.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4252.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4252

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Keywords: decision rights; intrinsic value; authority;

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References

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  1. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  2. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers, University of California at Berkeley 92-199, University of California at Berkeley.
  3. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  4. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Scholarly Articles 4554125, Harvard University Department of Economics.
  5. Ernst Fehr & Holger Herz & Tom Wilkening, 2013. "The Lure of Authority: Motivation and Incentive Effects of Power," American Economic Review, American Economic Association, American Economic Association, vol. 103(4), pages 1325-59, June.
  6. Oliver Hart & John Moore, 1994. "Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management," NBER Working Papers 4886, National Bureau of Economic Research, Inc.
  7. Owens, David & Grossman , Zachary & Fackler , Ryan, 2012. "The Control Premium: A Preference for Payoff Autonomy," University of California at Santa Barbara, Economics Working Paper Series qt5bg845s1, Department of Economics, UC Santa Barbara.
  8. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(1), pages 155-180, Winter.
  9. Scott Stern, 2004. "Do Scientists Pay to Be Scientists?," Management Science, INFORMS, INFORMS, vol. 50(6), pages 835-853, June.
  10. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(3), pages 604-631, June.
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Cited by:
  1. Sabrina Jeworrek & Vanessa Mertins, 2014. "When Pay Increases are Not Enough: The Economic Value of Wage Delegation in the Field," IAAEU Discussion Papers, Institute of Labour Law and Industrial Relations in the European Union (IAAEU) 201408, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  2. Randolph Sloof & Ferdinand von Siemens, 2014. "Illusion of Control and the Pursuit of Authority," CESifo Working Paper Series 4764, CESifo Group Munich.
  3. Daniela Grieco & Marco Faillo & Luca Zarri, 2013. "Top Contributors as Punishers," Working Papers, University of Verona, Department of Economics 24/2013, University of Verona, Department of Economics.
  4. Colombo, Massimo G. & Mohammadi, Ali & Lamastra, Cristina Rossi, 2014. "Innovative business models for high-tech entrepreneurial ventures: the organizational design challenges," Working Paper Series in Economics and Institutions of Innovation, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies 366, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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