Petters, Lea M. (2019). The Economics of Behavior. Essays on the Organizational Effects of Identification, Wage Expectations, and Fairness Concerns. PhD thesis, Universität zu Köln.

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This thesis deals with behavioral factors that critically influence the outcomes of organizational practices. Our research features a mix of different methods combining theoretical arguments with evidence from field and experimental data to investigate to what extent employees' decisions are driven by psychological motives such as emotional attachment, expectations, and fairness perceptions. The combination of methods allows us to analyze a problem from different perspectives and to gather evidence from complementary sources, thus giving a more complete picture of the question of interest. We show that behavioral mechanisms play a crucial role in determining the consequences of organizational practices, often affecting them in unexpected ways. Chapter 2 studies the role of employees' identification with their employer as a component of match quality for determining job satisfaction, effort provision, job search, bargaining behavior, and resulting wage growth. In a first step, we analyze a stylized formal model, which integrates the emotional attachment to the employer into the employee's utility function. As a second step, we test the theoretically predicted patterns using a novel employer-employee panel dataset. We take advantage of a validated survey measure of “affective commitment” as a proxy for employee identification. Consistent with our theoretical model, we find that, for committed employees, absolute wage is significantly less predictive for job satisfaction. Additionally, we observe that employees with higher commitment have significantly fewer absence days and more hours of unpaid overtime, which represent our effort measures. Moreover, higher commitment predicts a lower wage growth in the future and is associated with a lower propensity to search for alternatives, receive an external offer, and to quit the current employment voluntarily. However, we also find evidence that employees can successfully exploit their higher threat point when they have obtained an external offer, thus resulting in increased wage growth. This relationship seems to be even more pronounced for more committed employees. In chapter 3, we experimentally analyze the effect of quota interventions on subjective evaluations in a peer-review context. Our results show that quotas have a significant impact on peer-review behavior. First, we find that quotas affect the overall level of peer-reviews provided. This effect, however, depends on the perceived procedural fairness which varies between treatments. Second, we show that quotas lead to systematic biases in peer-reviews against the affirmed group. They receive significantly less favorable peer-reviews relative to their non-affirmed peers. This second effect is not related to the perceived procedural fairness since it remains robust across both quota treatments. Instead, these distortions seem to be a result of the enhanced competition among affirmed inviduals under the quota regime as they are fully driven by peer-reviews provided by affirmed individuals to other affirmed peers. Lastly, we study spillover effects of quotas on giving in an additional dictator experiment after the conclusion of the main experiment. We find that a quota in the previous experiment significantly reduces altruistic behavior among individuals that were affirmed before. Our study gives insights into potential negative side effects and shows that quotas can lead to distortions in subjective peer-reviews, and therefore harm the group that is supposed to benefit from the quota. Additionally, we provide evidence of negative spillover effects of quotas to non-competitive environments. We study the effect of training participation on employees' fair wage expectations, effort provision, and finally productivity in chapter 4. We theoretically argue that because of the increased productivity potential, employees hold higher fair wage expectations after receiving training. We use an extensive linked employer-employee survey dataset to study the relationship between training participation and future wage expectations. The analyses of our field dataset indicate that employees hold higher future wage expectations as a result of training participation. Our experimental results confirm this relationship and give additional insights into the behavioral mechanisms behind training participation. We find that even though training is effective in increasing the skills and thus productivity potential of an employee, this does not neccessary translate into increased productivity for the employer. Instead, our results show that trained employees negatively adjust effort both on the extensive and intensive margin. Additional analyses reveal that, in line with our theoretical considerations, the difference between the actual and the perceived fair wage is a determinant of whether or not an employee releases his productivity potential. Thus, these results indicate that fairness concerns can impair the positive productivity effects of training. The research presented in this thesis demonstrates the importance of psychological factors for employer-employee interactions and the outcomes of managerial measures. We show that it is critical to understand the behavioral mechanisms at play in order to achieve the intended results and potentially take precautionary actions to prevent adverse effects.

Item Type: Thesis (PhD thesis)
CreatorsEmailORCIDORCID Put Code
Petters, Lea M.lea.petters@gmx.deUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-104720
Date: 2019
Language: English
Faculty: Faculty of Management, Economy and Social Sciences
Divisions: Faculty of Management, Economics and Social Sciences > Business Administration > Corporate Development > Professorship for Business Administration and Human Resources Management
Subjects: Economics
Management and auxiliary services
Uncontrolled Keywords:
Behavioral EconomicsEnglish
Personnel EconomicsEnglish
Wage ExpectationsEnglish
Affirmative ActionEnglish
Date of oral exam: 17 December 2019
NameAcademic Title
Sliwka, DirkProf. Dr.
Heinz, MatthiasProf. Dr.
Refereed: Yes


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