Economics at your fingertips  

Benefit packages and individual behavior: choices over discrete goods with multiple attributes

Mark Van Boening, Tanja F. Blackstone, Michael McKee and Elisabet Rutstrom
Additional contact information
Tanja F. Blackstone: Navy Personnel Research, Studies and Technology, 5720 Integrity Drive, Millington, TN 38054-5026, USA, Postal: Navy Personnel Research, Studies and Technology, 5720 Integrity Drive, Millington, TN 38054-5026, USA

Managerial and Decision Economics, 2006, vol. 27, issue 6, 511-526

Abstract: Managers and employers use an array of rewards to attract and retain quality employees. An increasingly significant component of the overall compensation is the employee's benefits package. Flexible packages offer more choice but also incur higher decision costs. We conduct an experiment on choices over stylized benefits packages where discrete 'goods' have multiple attributes affecting the payoff function. We investigate the degree to which these complications affect choices. Eighty subjects play an individual-choice decision-cost game where they are implicitly asked to solve a complex programming problem. Our main results are that: (a) individual subjects respond to the relative tradeoff between the attributes, (b) some combinations of the attributes (apparently) entice subjects to search more and thus earn more, and (c) most subjects appear to adopt a heuristic that approximates the optimal solution. Further, subjects appear to value the right to make choices, as they rarely choose a fixed payoff option with a known payoff and low decision cost, even when the fixed payoff is 80% of the maximum possible under the decision-making task. Copyright © 2006 John Wiley & Sons, Ltd.

Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1002/mde.1285

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-05-20
Handle: RePEc:wly:mgtdec:v:27:y:2006:i:6:p:511-526