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Discretion, Productivity, and Work Satisfaction

Author

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  • Björn Bartling
  • Ernst Fehr
  • Klaus M. Schmidt

Abstract

In Bartling, Fehr, and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort, and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the effect of discretion on workers' welfare, confirming that workers earn rents.

Suggested Citation

  • Björn Bartling & Ernst Fehr & Klaus M. Schmidt, 2013. "Discretion, Productivity, and Work Satisfaction," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(1), pages 4-22, March.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201303)169:1_4:dpaws_2.0.tx_2-8
    DOI: 10.1628/093245613X660357
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    References listed on IDEAS

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    1. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
    2. 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, vol. 17(1), pages 155-180, Winter.
    3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    4. Morris M. Kleiner & Richard B. Freeman, 2000. "Who Benefits Most from Employee Involvement: Firms or Workers?," American Economic Review, American Economic Association, vol. 90(2), pages 219-223, May.
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    Citations

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    Cited by:

    1. Ester Manna & Alessandro De Chiara, 2016. "Delegation with a Reciprocal Agent," UB Economics Working Papers 2016/346, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    2. repec:eee:jeborg:v:147:y:2018:i:c:p:1-12 is not listed on IDEAS
    3. Lea Cassar, 2014. "Optimal contracting with endogenous project mission," ECON - Working Papers 150, Department of Economics - University of Zurich, revised Oct 2014.
    4. Lea Cassar, 2014. "Job mission as a substitute for monetary incentives: experimental evidence," ECON - Working Papers 177, Department of Economics - University of Zurich.
    5. Burdín, Gabriel & Halliday, Simon & Landini, Fabio, 2015. "Third-Party vs. Second-Party Control: Disentangling the Role of Autonomy and Reciprocity," IZA Discussion Papers 9251, Institute for the Study of Labor (IZA).
    6. van Damme, E.E.C., 2013. "Preventing abuse by controlling shareholders," Other publications TiSEM 8b719086-6332-459b-b046-3, Tilburg University, School of Economics and Management.

    More about this item

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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