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The power of delegation: Allowing workers to choose their wage

  • 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.)

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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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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  1. 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).
  2. Martin G. Kocher & Matthias Sutter, . "Individual versus group behavior and the role of the decision making procedure in gift-exchange experiments," Papers on Strategic Interaction 2002-27, Max Planck Institute of Economics, Strategic Interaction Group.
  3. Abeler, Johannes & Altmann, Steffen & Kube, Sebastian & Wibral, Matthias, 2006. "Reciprocity and Payment Schemes: When Equality Is Unfair," Ratio Working Papers 109, The Ratio Institute.
  4. 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.
  5. Björn Bartling & Urs Fischbacher, 2008. "Shifting the Blame: On Delegation and Responsibility," TWI Research Paper Series 32, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  6. Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004. "How Robust is Laboratory Gift Exchange?," Experimental Economics, Springer, vol. 7(2), pages 189-205, 06.
  7. Lucas C. Coffman, 2011. "Intermediation Reduces Punishment (and Reward)," American Economic Journal: Microeconomics, American Economic Association, vol. 3(4), pages 77-106, November.
  8. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2007. "Gift Exchange in a Multi-Worker Firm," Economic Journal, Royal Economic Society, vol. 117(522), pages 1025-1050, 07.
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