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Are Online Labor Markets Spot Markets for Tasks?: A Field Experiment on the Behavioral Response to Wage Cuts

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  • Chen, Daniel L.
  • Horton, John J.

Abstract

In some online labor markets, workers are paid by the task, choose what tasks to work on, and have little or no interaction with their (usually anonymous) buyer/employer. These markets look like true spot markets for tasks rather than markets for employment. Despite appearances, we find via a field experiment that workers act more like parties to an employment contract: workers quickly form wage reference points and react negatively to proposed wage cuts by quitting. However, they can be mollified with “reasonable” justifications for why wages are being cut, highlighting the importance of fairness considerations in their decision making. We find some evidence that “unreasonable” justifications for wage cuts reduce subsequent work quality. We also find that not explicitly presenting the worker with a decision about continuing to work eliminates “quits,” with no apparent reduction in work quality. One interpretation for this finding is that workers have a strong expectation that they are party to a quasi-employment relationship where terms are not changed, and the default behavior is to continue working.

Suggested Citation

  • Chen, Daniel L. & Horton, John J., 2016. "Are Online Labor Markets Spot Markets for Tasks?: A Field Experiment on the Behavioral Response to Wage Cuts," TSE Working Papers 16-675, Toulouse School of Economics (TSE).
  • Handle: RePEc:tse:wpaper:30557
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    References listed on IDEAS

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    Cited by:

    1. Apostolos Filippas & John Horton & Joseph M. Golden, 2017. "Reputation in the Long-Run," CESifo Working Paper Series 6750, CESifo Group Munich.
    2. Chen, Daniel L. & Schonger, Martin, 2016. "Social preferences or sacred values? Theroy and evidence of deontological motivations," TSE Working Papers 16-714, Toulouse School of Economics (TSE).
    3. Chen, Daniel L., 2016. "Tastes for Desert and Placation: A Reference Point-Dependent Model of Social Preferences," IAST Working Papers 16-60, Institute for Advanced Study in Toulouse (IAST).
    4. Kevin J. Boudreau, 2018. "Amateurs Crowds & Professional Entrepreneurs as Platform Complementors," NBER Working Papers 24512, National Bureau of Economic Research, Inc.
    5. Chen, Daniel L. & Levonyan, Vardges & Yeh, Susan, 2016. "Policies Affect Preferences: Evidence from Random Variation in Abortion Jurisprudence," IAST Working Papers 16-58, Institute for Advanced Study in Toulouse (IAST).
    6. Chen, Daniel L. & Yeh, Susan, 2016. "Government Expropriation Increases Economic Growth and Racial Inequality: Evidence from Eminent Domain," TSE Working Papers 16-693, Toulouse School of Economics (TSE).
    7. Chen, Daniel L. & Yeh, Susan, 2016. "How Do Rights Revolutions Occur? Free Speech and the First Amendment," IAST Working Papers 16-51, Institute for Advanced Study in Toulouse (IAST).
    8. repec:spr:grdene:v:27:y:2018:i:2:d:10.1007_s10726-018-9565-y is not listed on IDEAS

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    Keywords

    Economics of IS; Electronic Commerce; Field Experiments; IT and new organizational form;

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