Implicit Contracts, Unemployment, and Labor Market Segmentation

We analyze the impact of imperfect contract enforcement on the emergence of unemployment. In an experimental labor market where trading parties can form long-term employment relationships, we compare a work environment where effort is observable, but not verifiable to a situation where explicit contracts are feasible. Our main result shows that unemployment is much higher when third-party contract enforcement is absent. Unemployment is involuntary, being caused by firms' employment and contracting policy. Moreover, we show that implicit contracting can lead to a segmentation of the labor market. Firms in both segments earn similar profits, but workers in the secondary sector face much less favorable conditions than their counterparts in primary-sector jobs.incentives, implicit contracts, unemployment, fairness, dual labor markets

Promotions and Incentives: The Case of Multi-Stage Elimination Tournaments

Promotion tournaments play an important role for the provision of incentives in firms. In this paper, we extend research on single-stage rank-order tournaments and analyze behavior in multi-stage elimination tournaments. The main treatment of our laboratory experiment is a two-stage tournament in which equilibrium efforts are the same in both stages. We compare this treatment to a strategically equivalent one-stage tournament and to another two-stage tournament with a more convex wage structure. Confirming previous findings average effort in our one-stage treatment is close to Nash equilibrium. In contrast, subjects in our main treatment provide excess effort in the first stage both with respect to Nash predictions and compared to the equivalent one-stage tournament. The results for the more convex two-stage tournament show that excess effort in the first stage is a robust finding and that subjects react only weakly to differences in the wage structure.personnel economics, tournament, incentives, laboratory experiment

Reciprocity and Payment Schemes: When Equality Is Unfair

A growing literature stresses the importance of reciprocity, especially for employment relations. In this paper, we study the interaction of different payment modes with reciprocity. In particular,we analyze how equal wages affect performance and effciency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts and effciency. This is not caused by monetary incentives per se since under both wage schemes it is profit-maximizing for agents to exert high efforts. The treatment difference is rather driven by the fact that reciprocity is violated far more frequently in the equal wage treatment. Agents suffering from a violation of reciprocity subsequently withdraw effort. Our results suggest that individual reward and punishment opportunities are crucial for making reciprocity a powerful contract enforcement device.laboratory experiment; wage setting; wage equality; gift exchange; reciprocity; social norms; incomplete contracts; multiple agents

Gift Exchange and Workers' Fairness Concerns: When Equality Is Unfair

We study how different payment modes influence the effectiveness of gift exchange as a contract enforcement device. In particular, we analyze how horizontal fairness concerns affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts. This is not caused by monetary incentives per se since under both wage schemes it is profit-maximizing for agents to exert high efforts. The treatment difference instead seems to be driven by the fact that the norm of equity is violated far more frequently in the equal wage treatment. After having suffered from violations of the equity principle, agents withdraw effort. These findings hold even after controlling for the role of intentions, as we show in a third treatment. Our results suggest that adherence to the norm of equity is a necessary prerequisite for successful establishment of gift-exchange relations.reciprocity, gift exchange, equity, wage equality, wage setting, incomplete contracts

Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics

In this paper, we discuss recent evidence from economic experiments that study the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments: individual pay-for-performance schemes maximize efficiency but might lead to inequitable outcomes. We present findings from laboratory experiments that show under which circumstances partially incomplete contracts can create equitable work environments while at the same time reaching surprisingly efficient outcomes.laboratory experiments, wage setting, equity, gift exchange, reciprocity, incomplete contracts, incentives, organizational economics

Incentives and Information as Driving Forces of Default Effects

The behavioral relevance of non-binding defaults is well established. While most research has focused on decision makers’ responses to a given default, we argue that this individual decision making perspective is incomplete. Instead, a comprehensive understanding of default effects requires to take account of the strategic interaction between default setters and decision makers. We analyze theoretically and empirically which defaults emerge in such interactions, and under which conditions defaults are behaviorally most relevant. Our analysis demonstrates that the alignment of interests between default setters and decision makers, as well as their relative level of information are key drivers of default effects. In particular, default effects are more pronounced if the interests of the default setter and decision makers are more closely aligned. Moreover, decision makers are more likely to follow default options the less they are privately informed about the relevant decision environment

Eingeschränkt rationales Verhalten: Evidenz und wirtschaftspolitische Implikationen

Die Präzision ökonomischer Prognosen und die Qualität politischer Handlungsempfehlungen hängen in entscheidendem Ausmaß von der Qualität des zugrunde liegenden Verhaltensmodells ab. Nur ein empirisch gut fundiertes Modell ökonomischen Handelns erlaubt es, die Konsequenzen politischer Maßnahmen präzise abzuschätzen. In der wirtschaftswissenschaftlichen Analyse ist das Konzept des Homo Oeconomicus als Entscheidungs- und Verhaltensmodell weit verbreitet. Empirische Ergebnisse aus der Verhaltensökonomik legen jedoch zwei grundsätzliche Abweichungen vom traditionellen Modell des Homo Oeconomicus nahe: Abweichungen vom Prinzip der uneingeschränkten Rationalität einerseits und die Infragestellung einer universellen Eigennutzorientierung andererseits. Die vorliegende Arbeit gibt einen Überblick über ausgewählte, wirtschaftspolitisch bedeutsame Abweichungen vom Rationalitätspostulat. Anschließend diskutieren wir am Beispiel so genannter "nicht bindender Defaultoptionen", weshalb für eingeschränkt rationale Akteure politische Maßnahmen oder rechtliche Regelungen auch dann Verhaltenskonsequenzen haben können, wenn diese aus rationaler Sichtweise nicht zu erwarten wären und möglicherweise durch den Gesetzgeber auch nicht beabsichtigt sind. Abschließend stellen wir dar, wie nicht bindende Defaults selbst als Politikinstrument eingesetzt werden können: klug gewählt können sie dabei helfen, Entscheidungen zu verbessern ohne dabei individuelle Wahlfreiheit einzuschränken.Verhaltensökonomik, Paternalismus, Wirkung von Politikmaßnahmen, nicht-bindende Regeln, Wahrscheinlichkeitsverzerrungen, eingeschränkte Rationalität

Validity and reliability of speed tests used in soccer: A systematic review

Introduction Speed is an important prerequisite in soccer. Therefore, a large number of tests have been developed aiming to investigate several speed skills relevant to soccer. This systematic review aimed to examine the validity and reliability of speed tests used in adult soccer players. Methods A systematic search was performed according to the PRISMA guidelines. Studies were included if they investigated speed tests in adult soccer players and reported validity (construct and criterion) or reliability (intraday and interday) data. The tests were categorized into linear-sprint, repeated-sprint, change-of-direction sprint, agility, and tests incorporating combinations of these skills. Results In total, 90 studies covering 167 tests were included. Linear-sprint (n = 67) and change-of-direction sprint (n = 60) were studied most often, followed by combinations of the aforementioned (n = 21) and repeated-sprint tests (n = 15). Agility tests were examined fewest (n = 4). Mainly based on construct validity studies, acceptable validity was reported for the majority of the tests in all categories, except for agility tests, where no validity study was identified. Regarding intraday and interday reliability, ICCs>0.75 and CVs<3.0% were evident for most of the tests in all categories. These results applied for total and average times. In contrast, measures representing fatigue such as percent decrement scores indicated inconsistent validity findings. Regarding reliability, ICCs were 0.11–0.49 and CVs were 16.8–51.0%. Conclusion Except for agility tests, several tests for all categories with acceptable levels of validity and high levels of reliability for adult soccer players are available. Caution should be given when interpreting fatigue measures, e.g., percent decrement scores. Given the lack of accepted gold-standard tests for each category, researchers and practitioners may base their test selection on the broad database provided in this systematic review. Future research should pay attention to the criterion validity examining the relationship between test results and match parameters as well as to the development and evaluation of soccer-specific agility tests

Protein disulfide isomerase acts as an injury response signal that enhances fibrin generation via tissue factor activation

The activation of initiator protein tissue factor (TF) is likely to be a crucial step in the blood coagulation process, which leads to fibrin formation. The stimuli responsible for inducing TF activation are largely undefined. Here we show that the oxidoreductase protein disulfide isomerase (PDI) directly promotes TF-dependent fibrin production during thrombus formation in vivo. After endothelial denudation of mouse carotid arteries, PDI was released at the injury site from adherent platelets and disrupted vessel wall cells. Inhibition of PDI decreased TF-triggered fibrin formation in different in vivo murine models of thrombus formation, as determined by intravital fluorescence microscopy. PDI infusion increased — and, under conditions of decreased platelet adhesion, PDI inhibition reduced — fibrin generation at the injury site, indicating that PDI can directly initiate blood coagulation. In vitro, human platelet–secreted PDI contributed to the activation of cryptic TF on microvesicles (microparticles). Mass spectrometry analyses indicated that part of the extracellular cysteine 209 of TF was constitutively glutathionylated. Mixed disulfide formation contributed to maintaining TF in a state of low functionality. We propose that reduced PDI activates TF by isomerization of a mixed disulfide and a free thiol to an intramolecular disulfide. Our findings suggest that disulfide isomerases can act as injury response signals that trigger the activation of fibrin formation following vessel injury