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Labor-Leisure Trade-off in the Laboratory

Deniz Nebioglu and Ayca Giritligil ()

No 2018-02, BELIS Working Papers from BELIS, Istanbul Bilgi University

Abstract: This paper presents the results of a series of experiments which try to test the behavioral foundations of GHH preferences using the Ramsey framework in a controlled laboratory setting. The main objective is to elicit subjects’ innate preferences for income and leisure through an experimental design with real effort. To this end, we ran two experiments and we observed that subjects do not perceive leisure in the lab as real leisure, and hence they choose to work as much as they can even if the marginal revenue from extra work is very low. This result points out the methodological difficulty of creating labor/leisure choice environment in a laboratory setting. We concluded that an experiment which aims to investigate the effect of changed incentives on effort provision in a neoclassical labor supply model should not be designed as an individual decision making experiment but rather as a market experiment.

New Economics Papers: this item is included in nep-exp
Date: 2018-06
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