Should firms allow workers to choose their own wage?

Gary Charness

IZA World of Labor, 2016, No 223, 223

Abstract: Economists typically predict that people are inherently selfish; however, experimental evidence suggests that this is often not the case. In particular, delegating a choice (such as a wage) to the performing party may imbue this party with a sense of responsibility, leading to improved outcomes for both the delegating entity and the performing party. This strategy can be risky, as some people will still choose to act in a selfish manner, causing adverse consequences for productivity and earnings. An important issue to consider is therefore how to encourage a sense of responsibility in the performing party.

Keywords: delegation; responsibility; social outcomes; experimental evidence (search for similar items in EconPapers)
JEL-codes: B49 C91 D03 J2 J3 (search for similar items in EconPapers)
Date: 2016
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