Articles

Dennis A. V. Dittrich. Wages, Length of Relationship and Bargaining Power: An experimental study in a world of complete contracts

To explain potential sources of wage rigidity this article analyzes a model of reciprocal kindness applied to a repeated ultimatum game with changing and nonzero conflict payoffs. The model is also tested in a laboratory experiment. The results are compatible with the rentsharing approach to wage rigidity. Wages adjust to 'market pressure' but are less flexible when employees demand their wages, i. e. when they are in a relatively strong bargaining position.

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Gary Charness, Ramón Cobo-Reyes, Juan A. Lacomba, José María Pérez, Francisco Lagos. Social Comparisons in Wage Delegation: Experimental Evidence

This article examines whether social comparisons have behavioral effects on workers’ performance when a firm can choose workers’ wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers’ performance. Moreover, the relative effect of discrimination in relation to decision rights is larger than in relation to ...

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Dennis A. V. Dittrich, Martin G. Kocher. Monitoring and Pay: An Experiment on Employee Performance under Endogenous Supervision

We present an experimental test of a shirking model where monitoring intensity is endogenous and effort a continuous variable. Wage level, monitoring intensity and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, monitoring and pay should be complements. In our experiment, between and within treatment variation is qualitatively in line with the normative predictions of the model under standard assumptions. Yet, we also...

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Heather Antecol, Ozkan Eren, Serkan Ozbeklik. Peer Effects in Disadvantaged Primary Schools: Evidence from a Randomized Experiment

Throughout the past several decades there has been a nation-wide debate focusing on how to improve student achievement in the United States. The debate was fueled by the influential Coleman Report of 1966 which questioned the long-standing belief that school funding was a key determinant of student achievement. The report instead highlighted the importance of alternative determinants—e.g., family background and socio-economic status, teacher quality, and peer quality—which could have different...

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Dennis Dittrich, Werner Güth, Boris Maciejovsky. Overconfidence in Investment Decisions: An Experimental Approach

The evidence on decision biases and heuristics challenges the prescriptive validity of standard finance theory which is still the dominant paradigm in modern finance. One such violation is the overcon fidence bias in the sense of systematically overestimating the accuracy of one's decisions and the precision of one's knowledge. Overconfidence has been observed in many professionals (for a survey see Yates (1990)). Most relevant for our study, overconfidence was found in entrepreneurs (Cooper e...

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Aleksander Berentsen, Michael McBride, Guillaume Rocheteau. Limelight on Dark Markets: An Experimental Study of Liquidity and Information

The goal of this paper is to study how informational frictions affect asset liquidity in OTC markets in a laboratory setting. The experiments replicate an OTC market similar to the one used in monetary and financial economics (Shi, 1995; Trejos and Wright, 1995; Duffie, Garleanu, and Pedersen, 2005): individuals are matched bilaterally and at random, there are gains from trades due to differences in technologies and endowments, and the terms of trade are determined through a simple bargaining ...

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