An experiment on markets and contracts : do social preferences determine corporate cultureReport as inadecuate




An experiment on markets and contracts : do social preferences determine corporate culture - Download this document for free, or read online. Document in PDF available to download.

Editor: Universidad Carlos III de Madrid. Departamento de Economía

Issued date: 2007-03

ISSN: 2340-5031

Serie-No.: UC3M Working papers. Economics;07-10

Keywords: Social preferences , Team incentives , Mechanism design , Experimental economics

Rights: Atribución-NoComercial-SinDerivadas 3.0 España

Abstract:This paper reports experimental evidence on a stylized labor market. The experiment isdesigned as a sequence of three treatments. In the last treatment, TR3, four principals,who face four teams of two agents, compete by offering the agents a contract from This paper reports experimental evidence on a stylized labor market. The experiment isdesigned as a sequence of three treatments. In the last treatment, TR3, four principals,who face four teams of two agents, compete by offering the agents a contract from afixed menu. In this menu, each contract is the optimal solution of a (completeinformation) mechanism design problem where principals face agents’ who have social(i.e. interdependent) distributional preferences a’ la Fehr and Schmidt 19 with aspecific parametrization. Each agent selects one of the available contracts offered by theprincipals (i.e. he -chooses to work- for a principal). Production is determined by theoutcome of a simple effort game induced by the chosen contract. In the first twotreatments, TR1 and TR2, we estimate individual social preference parameters andbeliefs in the effort game, respectively. We find that social preferences are significantdeterminants of the matching process between labor supply and demand in the marketstage, as well as principals’ and agents’ contract and effort decisions. In addition, wealso see that social preferences explain the matching process in the labor market, asagents display a higher propensity to choose to work for a principal with similardistributional preferences.+-





Author: Cabrales, Antonio; Miniaci, Raffaele; Piovesan, Marco; Ponti, Giovanni

Source: http://e-archivo.uc3m.es


Teaser



Universidad Carlos III de Madrid Repositorio institucional e-Archivo http:--e-archivo.uc3m.es Departamento de Economía DE - Working Papers.
Economics.
WE 2007-03 An experiment on markets and contracts : do social preferences determine corporate culture? Cabrales, Antonio http:--hdl.handle.net-10016-677 Descargado de e-Archivo, repositorio institucional de la Universidad Carlos III de Madrid Working Paper 07-20 Economic Series 10 March 2007 Departamento de Economía Universidad Carlos III de Madrid Calle Madrid, 126 28903 Getafe (Spain) Fax (34-91) 6249875 AN EXPERIMENT ON MARKETS AND CONTRACTS: DO SOCIAL PREFERENCES DETERMINE CORPORATE CULTURE?∗ Antonio Cabrales1, Raffaele Miniaci 2, Marco Piovesan 3and Giovanni Ponti 4 † Abstract This paper reports experimental evidence on a stylized labor market.
The experiment is designed as a sequence of three treatments.
In the last treatment, TR3, four principals, who face four teams of two agents, compete by offering the agents a contract from a fixed menu.
In this menu, each contract is the optimal solution of a (complete information) mechanism design problem where principals face agents’ who have social (i.e.
interdependent) distributional preferences a’ la Fehr and Schmidt [19] with a specific parametrization.
Each agent selects one of the available contracts offered by the principals (i.e.
he “chooses to work” for a principal).
Production is determined by the outcome of a simple effort game induced by the chosen contract.
In the first two treatments, TR1 and TR2, we estimate individual social preference parameters and beliefs in the effort game, respectively.
We find that social preferences are significant determinants of the matching process between labor supply and demand in the market stage, as well as principals’ and agents’ contract and effort decisions.
In addition, we also see that social preferences explain the matching process in the labor market, as agents display a higher propensity t...





Related documents