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Co-employment of permanently and temporarily employed agents

Author

Listed:
  • Werner Güth

    (Max Planck Institute of Economics, Strategic Interaction Group)

  • Martin G. Kocher

    (University of Munich, Department of Economics)

  • Vera Popova

    (Max Planck Institute of Economics, Strategic Interaction Group)

Abstract

One-shot interaction and repeated interaction often co-exist in the real world. We study possible behavioral effects of this co-existence in a principal-agent setting, in which a principal simultaneously employs a permanent and a temporary agent. Our experimental results indicate that there is "discrimination" between the two agents and that the available information for agents determines the extent of this discrimination, even though the theoretical solution of the game implies equal treatment of agents. Discrimination is, thus, a consequence of reciprocity. Agents that are discriminated against react negatively by withholding effort.

Suggested Citation

  • Werner Güth & Martin G. Kocher & Vera Popova, 2010. "Co-employment of permanently and temporarily employed agents," Jena Economic Research Papers 2010-016, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2010-016
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    Cited by:

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    2. Martin G. Kocher & Fangfang Tan & Jing Yu, 2018. "Providing Global Public Goods: Electoral Delegation And Cooperation," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 381-397, January.
    3. Jingcheng Fu & Martin Sefton & Richard Upward, 2017. "Social comparisons in job search: experimental evidence," Discussion Papers 2017-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    4. Kocher, Martin G. & Luhan, Wolfgang J. & Sutter, Matthias, 2012. "Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages," Discussion Papers in Economics 12816, University of Munich, Department of Economics.
    5. Daniele Nosenzo, 2010. "The Impact of Pay Comparisons on Effort Behavior," Discussion Papers 2010-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    6. Angelova, Vera & Güth, Werner & Kocher, Martin G., 2019. "Leadership in a Public Goods Experiment with Permanent and Temporary Members," IHS Working Paper Series 10, Institute for Advanced Studies.
    7. Daniele Nosenzo, 2012. "Pay Secrecy and effort provision," Discussion Papers 2012-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    8. Fu, Jingcheng & Sefton, Martin & Upward, Richard, 2019. "Social comparisons in job search," Journal of Economic Behavior & Organization, Elsevier, vol. 168(C), pages 338-361.
    9. Daniele Nosenzo, 2013. "Pay Secrecy And Effort Provision," Economic Inquiry, Western Economic Association International, vol. 51(3), pages 1779-1794, July.
    10. Grund, Christian & Harbring, Christine & Thommes, Kirsten, 2018. "Group (Re-) formation in public good games: The tale of the bad apple?," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 306-319.
    11. Sven Fischer & Eva-Maria Steiger, 2009. "Exploring the Effects of Unequal and Secretive Pay," Jena Economic Research Papers 2009-107, Friedrich-Schiller-University Jena.
    12. Christian Grund & Christine Harbring & Kirsten Thommes & Katja Rebecca Tilkes, 2020. "Decisions on Extending Group Membership—Evidence from a Public Good Experiment," Games, MDPI, Open Access Journal, vol. 11(4), pages 1-27, December.
    13. Grund, Christian & Harbring, Christine & Thommes, Kirsten, 2015. "Cooperation in Diverse Teams: The Role of Temporary Group Membership," IZA Discussion Papers 8761, Institute of Labor Economics (IZA).
    14. Martin G. Kocher & Wolfgang J. Luhan & Matthias Sutter, 2012. "Testing a forgotten aspect of Akerlof�s gift exchange hypothesis: Relational contracts with individual and uniform wages," Working Papers 2012-02, Faculty of Economics and Statistics, University of Innsbruck.

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    More about this item

    Keywords

    principal-agent problem; permanent and temporary employment; fairness; wage discrimination;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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