Social preferences, accountability, and wage bargaining

Kocher, Martin G.; Poulsen, Odile und Zizzo, Daniel J. (September 2012): Social preferences, accountability, and wage bargaining. Discussion Papers in Economics 2012-22

Abstract

We assess the extent of preferences for employment in a collective wage bargaining situation with heterogeneous workers. We vary the size of the union and introduce a treatment mechanism transforming the voting game into an individual allocation task. Our results show that highly productive workers do not take employment of low productive workers into account when making wage proposals, regardless of whether insiders determine the wage or all workers. The level of pro-social preferences is small in the voting game, while it increases as the game is transformed into an individual allocation task. We interpret this as an accountability effect.

• Item Type: Paper
• Keywords: social preferences, wage bargaining, accountability, collective decision making
• Faculties: Economics; Economics > Munich Discussion Papers in Economics; Economics > Chairs > Chair of Empirical Economics
• Subjects: 300 Social sciences > 300 Social sciences, sociology and anthropology; 300 Social sciences > 330 Economics
• JEL Classification: C91, C92, D71, J51, J52
• Language: English

References

Abbink K, Herrmann B. The Moral Costs of Nastiness. Economic Inquiry 2011: 49; 631-633

Bardsley N. Dictator Game Giving: Altruism or Artefact? Experimental Economics 2008: 1; 122-133

Blair DH, Crawford DL. Labor Union Objectives and Collective Bargaining. Quarterly Journal of Economics 1984: 99; 547-566

Bohnet I, Frey B. The Sound of Silence in Prisoner's Dilemma and Dictator Games. Journal of Economic Behavior and Organization 1999: 38; 43-57

Bolton GE, Ockenfels A. ERC: A Theory of Equity, Reciprocity, and Competition. American Economic Review 2000: 90; 166-193

Bornstein G, Yaniv I. Individual and Group Behavior in the Ultimatum Game: Are Groups More “Rational” Players? Experimental Economics 1998: 1; 101-108

Cacioppo JT, Petty R, Feng Kao C. The Efficient Assessment of Need for Cognition. Journal of Personality Assessment 1984: 48; 306-307

Charness G, Rigotti L, Rustichini A. Individual Behavior and Group Membership. American Economic Review 2007: 97; 1340-1352

Charness G, Rabin M. Understanding Social Preferences with Simple Tests. Quarterly Journal of Economics 2002:117; 817-869

Chen Y, Li S. Group Identity and Social Preferences. American Economic Review 2009: 99; 431-457

Dana J, Weber R, Kuang J X. Exploiting Moral Wriggle Room: Behavior Inconsistent with a Preference for Fair Outcomes. Economic Theory 2007: 33; 67-80

Dufwenberg M, Kirchsteiger G. A Theory of Sequential Reciprocity. Games and Economic Behavior 200: 47; 268-298

Eckel C, Grossman P. Altruism in Anonymous Dictator Games. Games and Economic Behavior 1996: 16; 181-191

Ellingsen T, Johannesson M. Pride and Prejudice: The Human Side of Incentive Theory. American Economic Review 2008: 98; 990-1008

Engelmann D, Strobel M. Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments. American Economic Review 2004: 94; 857-869

Engle-Warnick J, Laszlo S. Learning-by-Doing in an Ambiguous Environment. McGill University Department of Economics Working Paper, 2006s-29; 2006

Falk A, Fischbacher U. A Theory of Reciprocity. Games and Economic Behavior 2006: 54; 293-315

Farber H. Individual Preferences and Union Wage Determination: the Case of United Mine Workers. Journal of Political Economy 1978: 86; 932-942

Fehr E, Schmidt KM. A Theory of Fairness, Competition, and Cooperation. Quarterly Journal of Economics 1999: 114; 817-868

Fischbacher U. z-Tree: Zurich Toolbox for Ready-Made Economic Experiments. Experimental Economics 2007: 10; 171-178

Forsythe R, Horowitz JL, Savin, N E, Sefton, M. Fairness in Simple Bargaining Games. Games and Economic Behavior 1994: 6; 347-369

Greiner B. An Online Recruitment System for Economic Experiments. In: Kremer, K., Macho, V. (Eds.). Forschung und wissenschaftliches Rechnen 2003, GWDG Bericht 63. Göttingen 2004; 79-93

Grossman, G. Union Wages, Seniority and Employment. American Economic Review 1983: 73; 277-290

Güth, W, Huck, S, Ockenfels, P. Two-Level Ultimatum Bargaining with Incomplete Information: an Experimental Study. Economic Journal 1996: 106; 593-604

Hargreaves Heap SP, Zizzo DJ. The Value of Groups. American Economic Review 2009: 99; 295-323

Hoffman E, McCabe K, Shachat K, Smith V. Social Distance and Other-Regarding Behavior in Dictator Games. American Economic Review 1996: 86; 653-660

Holt CA, Laury SK. Risk Aversion and Incentive Effects. American Economic Review 2002: 92; 1644-1655

Insko C, Hoyle R, Pinkley R, Hong G, Slim R, Dalton G, Lin Y, Ruffin W, Dardis G, Bernthal P, Schopler J. Individual-Group Discontinuity: The Role of a Consensus Rule. Journal of Experimental Social Psychology 1988: 24; 505-519

Insko, C, Pinkley R, Hoyle R, Dalton B, Hong G, Slim R, Landry P, Holton B, Ruffin P, Thibaut J. Individual versus Group Discontinuity: The Role of Intergroup Contact. Journal of Experimental Social Psychology 1987: 23; 250-267

List JA. On the Interpretation of Giving in Dictator Games. Journal of Political Economy 2007: 115; 482-493

Kahneman D, Knetsch JL, Thaler R. Fairness and the Assumptions of Economics. Journal of Business 1986: 59; 285-300

Kerschbamer R. The geometry of distributional preferences and a nonparametric identification approach. Mimeo, Department of Economics, University of Innsbruck; 2012

Kocher MG, and Sutter M. Individual versus Group Behavior and the Role of the Decision Making Procedure in Gift-Exchange Experiments. Empirica 2007: 34; 63-88

Kugler T, Bornstein G, Kocher MG, Sutter M. Trust between Individuals and Groups: Groups are Less Trusting than Individuals but Just as Trustworthy. Journal of Economic Psychology 2007: 28; 646-657

Linbeck A, Snower D. The Insider-Outsider Theory of Employment and Unemployment, MIT Press, Cambridge, Massachusetts; 1988

Luhan, WJ, Kocher MG, Sutter, M. Group Polarization in the Team Dictator Game Reconsidered. Experimental Economics 2009: 12; 26-41 MacDonald I, Solow R. Wage Bargaining and Employment. American Economic Review 1981: 71; 896-908

Pahlke J, Strasser S, Vieider F. Risk-Taking for Others under Accountability. Economics Letters 2012: 114; 102-105

Rabin M. Incorporating Fairness into Game Theory and Economics. American Economic Review 1993: 83; 1281-1302

Starmer C, Sugden, R. Does the Random-Lottery Incentive System Elicit True Preferences? An Experimental Investigation. American Economic Review 1991: 81; 971-978

Stöber J, The Social Desirability Scale-17 (SDS-17). European Journal of Psychological Assessment 2001: 17; 222-232

Sutter M. Individual Behavior and Group Membership: Comment. American Economic Review 2009: 99; 2247-2257

Tajfel H, Billig, MG, Bundy RP, Flament C. Social Categorization and Intergroup Behavior. European Journal of Social Psychology 1971: 1; 149-178

Vieider F. Moderate Stake Variations for Risk and Uncertainty, Gains and Losses: Methodological Implications for Comparative Studies. Economics Letters 2012, forthcoming

Zizzo DJ. Experimenter Demand Effects in Economic Experiments. Experimental Economics 2010: 13; 75-98