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Labor-Leisure Trade-off in the Laboratory

Author

Listed:
  • Deniz Nebioglu

    (Bilgi Economics Lab of Istanbul (BELIS)
    Istanbul Bilgi University)

  • Ayça Ebru Giritligil

    (Murat Sertel Center for Advanced Economic Studies
    Istanbul Bilgi University)

Abstract

This paper presents the results of a series of experiments which try to test the behavioral foundations of GHH preferences using the Ramsey framework in a controlled laboratory setting. The main objective is to elicit subjects’ innate preferences for income and leisure through an experimental design with real effort. To this end, we ran two experiments and we observed that subjects do not perceive leisure in the lab as real leisure, and hence they choose to work as much as they can even if the marginal revenue from extra work is very low. This result points out the methodological difficulty of creating labor/leisure choice environment in a laboratory setting. We concluded that an experiment which aims to investigate the effect of changed incentives on effort provision in a neoclassical labor supply model should not be designed as an individual decision making experiment but rather as a market experiment.

Suggested Citation

  • Deniz Nebioglu & Ayça Ebru Giritligil, 2018. "Labor-Leisure Trade-off in the Laboratory," BELIS Working Papers 2018-02, BELIS, Istanbul Bilgi University.
  • Handle: RePEc:beb:wpbels:201802
    as

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    File URL: http://repeck.bilgi.edu.tr/RePEc/beb/wpbels/BelisWP_BELIS05.pdf
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    References listed on IDEAS

    as
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