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The power of delegation: Allowing workers to choose their wage

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Author Info

  • Gary Charness

    ()
    (University of California at Santa Barbara)

  • Ramón Cobo-Reyes

    ()
    (Department of Economic Theory and Economic History, University of Granada.)

  • Natalia Jiménez

    ()
    (Department of Economic Theory and Economic History, University of Granada.)

  • Juan Antonio Lacomba

    ()
    (Department of Economic Theory and Economic History, University of Granada.)

  • Francisco Lagos

    ()
    (Department of Economic Theory and Economic History, University of Granada.)

Abstract

This paper analyzes the effect of delegation on the employees’ performance in an experimental gift exchange game where employers may allow workers to choose their own wage. Our results show that workers reciprocate positively towards companies that delegate the decision of the wage, obtaining that higher effort levels are displayed when workers are free to choose their wage, even when wages chosen by employees are similar to those assigned by employers. In addition, we find that this enhancement in workers’ behavior is mainly due to the positive effect of delegation per se rather than to the “responsibility-alleviation”.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/wpaper/thepapers09_07.pdf
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Bibliographic Info

Paper provided by Department of Economic Theory and Economic History of the University of Granada. in its series ThE Papers with number 09/07.

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Length: 24 pages
Date of creation: 04 2010
Date of revision:
Handle: RePEc:gra:wpaper:09/07

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Related research

Keywords: labor market; gift exchange-game; delegation; responsibility-allevietion; experiments.;

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References

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  1. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 67-87.
  2. Brown, Martin & Falk, Armin & Fehr, Ernst, 2003. "Relational Contracts and the Nature of Market Interactions," IZA Discussion Papers 897, Institute for the Study of Labor (IZA).
  3. Kocher, Martin G. & Sutter, Matthias, 2007. "Individual versus group behavior and the role of the decision making procedure in gift-exchange experiments," Munich Reprints in Economics 18214, University of Munich, Department of Economics.
  4. Abeler, Johannes & Altmann, Steffen & Kube, Sebastian & Wibral, Matthias, 2006. "Reciprocity and Payment Schemes: When Equality Is Unfair," Ratio Working Papers 109, The Ratio Institute.
  5. Charness, Gary B, 2004. "Attribution And Reciprocity In An Experimental Labor Market," University of California at Santa Barbara, Economics Working Paper Series qt8rp6b18c, Department of Economics, UC Santa Barbara.
  6. Charness, Gary & Frechette, Guillaume R & Kagel, John H, 2002. "How Robust is Laboratory Gift Exchange?," University of California at Santa Barbara, Economics Working Paper Series qt8qq4k3ph, Department of Economics, UC Santa Barbara.
  7. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2004. "Gift Exchange in a Multi-worker Firm," Tinbergen Institute Discussion Papers 04-100/1, Tinbergen Institute.
  8. Lucas C. Coffman, 2011. "Intermediation Reduces Punishment (and Reward)," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 77-106, November.
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Cited by:
  1. Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-79, August.

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