Social Preferences,Sorting, and Competition*

In this paper, I investigate how an increase in competition for workers influences the impact of social preferences on labor‐market outcomes. By sorting themselves into firms with homogeneous work forces, workers can ensure that they suffer less from social comparisons. Competition promotes choice and thus facilitates sorting. However, competition also boosts rent differences in the labor market, because firms cannot curb internal inequity among its employees without losing workers to competitors. To reduce their exposure to social comparisons, workers might engage in inefficient sorting into unemployment. Consequently, social preferences can have strong effects (i.e., unemployment) in a competitive labor market, whereas they only have a slight impact on labor‐market outcomes in a monopsony.     

Competition,cooperation, and corporate culture

Cooperation between workers can be of substantial value to a firm, yet its level often varies substantially between firms. We show that these differences can unfold in a competitive labor market if workers have heterogeneous social preferences and preferences are private information. In our model, workers differ in their willingness to cooperate voluntarily. We show that there always exists a separating equilibrium in which workers self‐select into firms that differ in their monetary incentives as well as their level of worker cooperation. Our model highlights the role of sorting and worker heterogeneity in the emergence of heterogeneous corporate cultures. It also provides a new explanation for the coexistence of nonprofit and for‐profit firms.

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Bargaining under incomplete information, fairness, and the hold-up problem

In the hold-up problem incomplete contracts cause the proceeds of relationship-specific investments to be allocated by bargaining. This paper investigates the corresponding investment incentives if individuals have heterogeneous fairness preferences. Individual preferences are taken to be private information. Investments can then signal preferences and thereby influence beliefs and bargaining behavior. In consequence, individuals might choose high investments in order not to signal information that is unfavorable in the ensuing bargaining.     

Illusion of control and the pursuit of authority

We measure participants’ willingness to pay for transparently useless authority—the right to make a completely uninformed task decision. We further elicit participants’ beliefs about receiving their preferred outcome if they make the decision themselves, and if another participant makes the decision for them. We find that participants pay more to make the decision themselves if they also believe that they can thus increase the probability of getting their preferred outcome. Illusion of control therefore exists in a controlled laboratory environment with monetary incentives and is connected to peoples’ pursuit of authority.     

Henry George and Social Theory

A bstract . It was contended in Part 1 (in the January, 1995 issue) that Henry George should be recognized as an original American social theorist. He was a pioneering postmodern contributor to social theory who criticized the linear idea of progress and anticipated Durkheim's concept of the "collective consciousness."
He recognized the fateful consequences of the separation of political economy into "economics" and "sociology." These include the loss of moral considerations from political economy , and the rise of a sociology that culminates in the proliferation of meaningless abstractions because it is premised on amoral economic assumptions. His theory of speculative land value as the cause of civilizations decline is recapitulated and shown in a larger context. The congruence between the concerns and conceptions of George and Weber is detailed.
Part II concludes by tracing the tragic consequences for modern American social theory, from Spencer to Parsons , that result from confusing the value of commodities with the value of land, of private wealth with social value.     

The intensity of incentives in firms and markets: Moral hazard with envious agents

While most market transactions are subject to strong incentives, transactions within firms are often not explicitly incentivized. This paper offers an explanation for this observation based on the assumption that agents are envious and suffer utility losses if others receive higher wages. We analyze the impact of envy on optimal incentive contracts in a general moral hazard model and isolate the countervailing effects of envy on the costs of providing incentives. We show that envy creates a tendency towards flat-wage contracts if agents are risk-averse and there is no limited liability. Empirical evidence suggests that social comparisons are more pronounced among employees within firms than among individuals that interact in markets. Flat-wage contracts are then more likely to be optimal in firms.     

The differential effects of retail density: An investigation of goods versus service settings

Two studies investigate the impact of retail density and time pressure on shoppers' store attitudes and behavioral intentions. In a goods setting, experiment 1 results show a curvilinear pattern as the level of retail density increases. That is, individuals prefer a medium level of crowding to a store with low or high crowding. This inverted-U shaped crowding effect has not previously been tested in the retailing literature. Experiment 2 employs a service setting, where the relationship between retail crowding and outcome variables is found to be linear rather than curvilinear, except under conditions of time pressure. In contrast to the goods setting, individuals have more favorable attitudes and expect to pay more for a service as the level of crowding increases. Thus, our study findings suggest that the optimal level of crowding depends on the type of retail setting.     

Henry George

A bstract . It is contended in Part I that Henry George should be recognized as an original American social theorist. He was a pioneering postmodern contributor to social theory who criticized the linear idea of progress and anticipated Durkheim's concept of the "collective consciousness," He recognized the fateful consequences of the separation of political economy into "economics" and "sociology." These include the loss of moral considerations from political economy , and the rise of a sociology that culminates in the proliferation of meaningless abstractions because it is premised on amoral economic assumptions. His theory' of speculative land value as the cause of civilizations' decline is recapitulated and shown in a larger context. The congruence between George's and Weber's concerns and conceptions is detailed. Part 11 (in the April 1995 issue) concludes by tracing the tragic consequences for modern American social theory, from Spencer to Parsons , that result from confusing the value of commodities with the value of land, of private wealth with social value.     

The Problem of Modem Poverty

A bstract . This paper discusses the congruence between Hegel's and George's conception of the most pressing problem of modem life: increasing poverty alongside increasing wealth. It also presents Hegel's and George's solutions to the problem–emigration and the land tax, respectively. Secondly, the paper considers the generation of an urban rabble by modem society in terms of its destabilizing consequences for the relationships among the economy, language, and ethics. The conclusion addresses the insurmountable problem for Hegel's system—the effects of unjust land practices, which were repeated after European colonization of America—as diagnosed by Henry George.     

Effects of Initial Payment Policy on the Welfare of Saskatchewan Wheat and Barley Producers

This paper calculates the historical ex ante producer surplus of initial payments acting as price floors to Saskatchewan wheat and barley producers. To do this, a Nerlovian-type partial adjustment model and rational expectations are used. The Nerlovian model is somewhat unique in that it is argued that the Nerlovian partial adjustment model can be expanded to a multi-product partial adjustment model, and this is strongly supported by the data. The calculation of the ex ante producer surplus to Saskatchewan producers indicates that initial payment policy is causing only minor market distortions.
Dans le présent document, on établit la partie excédentaire des paiements par anticipation initiaux à la production qui servent de prix plancher aux producteurs de blé et d'orge de la Saskatchewan. Pour cela, on s'est basé sur un modéle à ajustement partiel de type Nerlovian et les attentes rationnelles. Le modèle Nerlovian est particulier en ce sens qu'on suppose que le modèle à ajustement partiel peut s'étendre à de nombreux produits, ce que confirment nettement les données. Le calcul de la part excédentaire du paiement original versé aux producteurs de la Saskatchewan révèle que la politique du paiement initial n'entraîne que de très légères perturbations sur le marché.