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Fair Wages and the Co-Employment of Hired and Rented Hands - An Experimental Study


  • Dorothea Alewell
  • Wiebke Kuklys


  • Colette Friedrich
  • Werner Güth



A firm with stochastic demand can rely on hired hands when demand is low and rent additional labour when demand is higher. For high demand this implies the co-employment of hired hands, paid directly by the firm, and of rented hands who are paid by a rental agency. This may cause severe problems if wages differ systematically between hired and rented hands. Will rented hands accept lower wages than hired hands? Or will rented hands demand higher wages as a compensation for flexibility? Fairness norms might play an important role in wage-setting decisions. We will explore theoretically and experimentally possible fairness considerations of the involved parties.

Suggested Citation

  • Dorothea Alewell & Wiebke Kuklys & Colette Friedrich & Werner Güth, "undated". "Fair Wages and the Co-Employment of Hired and Rented Hands - An Experimental Study," Papers on Strategic Interaction 2005-08, Max Planck Institute of Economics, Strategic Interaction Group.
  • Handle: RePEc:esi:discus:2005-08

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    References listed on IDEAS

    1. Gantner, Anita & Guth, Werner & Konigstein, Manfred, 2001. "Equitable choices in bargaining games with joint production," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 209-225, October.
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    More about this item


    Principal-agent problem; rented labour; fairness; wage discrimination; outsourcing;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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