Stutzer, A., &Lalive, R. (2004). The role of social work norms in job searching and subjective well-being. Journal of the European Economic Association, 2(4), 696-719.

Social norms are usually neglected in economics, because they are to a large extent enforced through nonmarket interactions and difficult to isolate empirically. In this paper, we offer a direct measure of the social norm to work and we show that this norm has important economic effects. The stronger the norm, the more quickly unemployed people find a new job. This behavior can be explained by utility differences, probably due to social pressure. Unemployed people are significantly less happy than employed people and their reduction in life satisfaction is the larger, the stronger the norm is.

 

 

Stutzer, A., &Lalive, R. (2004). The role of social work norms in job searching and subjective well-being. Journal of the European Economic Association, 2(4), 696-719.

https://doi.org/10.1162/1542476041423331  

 

Kahneman, D., Wakker, P. P., &Sarin, R. (1997). Back to Bentham? Explorations of experienced utility.

Two core meanings of “utility” are distinguished. “Decision utility” is the weight of an outcome in a decision. “Experienced utility” is hedonic quality, as in Bentham’s usage. Experienced utility can be reported in real time (instant utility), or in retrospective evaluations of past episodes (remembered utility). Psychological research has documented systematic errors in retrospective evaluations, which can induce a preference for dominated options. We propose a formal normative theory of the total experienced utility of temporally extended outcomes. Measuring the experienced utility of outcomes permits tests of utility maximization and opens other Unes of empirical research.

 

 

Kahneman, D., Wakker, P. P., &Sarin, R. (1997). Back to Bentham? Explorations of experienced utility. The quarterly journal of economics, 112(2), 375-406.

https://doi.org/10.1162/003355397555235

 

Wilson, T. D., &Schooler, J. W. (1991). Thinking too much: introspection can reduce the quality of preferences and decisions.Journal of personality and social psychology, 60(2), 181-192.

In Study 1, 49 college students’ preferences for different brands of strawberry jams were compared with experts’ ratings of the jams. Students who analyzed why they felt the way they did agreed less with the experts than students who did not. In Study 2, 243 college students’ preferences for college courses were compared with expert opinion. Some students were asked to analyze reasons; others were asked to evaluate all attributes of all courses. Both kinds of introspection caused people to make choices that, compared with control Ss’, corresponded less with expert opinion. Analyzing reasons can focus people’s attention on nonoptimal criteria, causing them to base their subsequent choices on these criteria. Evaluating multiple attributes can moderate people’s judgments, causing them to discriminate less between the different alternatives.

 

 

Wilson, T. D., &Schooler, J. W. (1991). Thinking too much: introspection can reduce the quality of preferences and decisions.Journal of personality and social psychology, 60(2), 181-192.

 

 

Ross, M. (1989). Relation of implicit theories to the construction of personal histories. Psychological Review, 96(2), 341-357.

It is hypothesized that people possess implicit theories regarding the inherent consistency of their attributes, as well as a set of principles concerning the conditions that are likely to promote personal change or stability. The nature of these theories is discussed in the context of a study of beliefs about life-span development. It is then suggested that people use their implicit theories of self to construct their personal histories. This formulation is used to interpret the results of a wide-ranging set of studies of memory of personal attributes. It is concluded that implicit theories of stability and change can lead to biases in recall. The extent and practical implications of these biases are discussed.

 

 

Ross, M. (1989). Relation of implicit theories to the construction of personal histories. Psychological Review, 96(2), 341-357.

http://dx.doi.org/10.1037/0033-295X.96.2.341  

 

Frey, B. S., &Osterloh, M. (2005). Yes, managers should be paid like bureaucrats. Journal of Management Inquiry, 14(1), 96-111.

Corporate scandals, reflected in excessive management compensation and fraudulent accounts, cause great damage. Agency theory’s insistence to link the compensation of managers and directors as closely as possible to firm performance is a major reason for these scandals. They cannot be overcome by improving variable pay for performance as selfish extrinsic motivation is reinforced. Based on the common pool approach to the firm, institutions are proposed, serving to raise intrinsically motivated corporate virtue. More importance is to be attributed to fixed pay and strengthening the legitimacy of authorities by procedural fairness, relational contracts, and organizational citizenship behavior.



Frey, B. S., &Osterloh, M. (2005). Yes, managers should be paid like bureaucrats. Journal of Management Inquiry, 14(1), 96-111.

https://doi.org/10.1177/1056492604273757

 

 

Osterloh, M., &Frey, B. S. (2006). Shareholders should welcome knowledge workers as directors. Journal of Management &Governance, 10(3), 325-345.

The most influential approach of corporate governance, the view of shareholders’ supremacy does not take into consideration that the key task of modern corporations is to generate and transfer firm-specific knowledge. It proposes that, in order to overcome the widespread corporate scandals, the interests of top management and directors should be increasingly aligned to shareholder’ interests by making the board more responsible to shareholders, and monitoring of top management by independent outside directors should be strengthened. Corporate governance reform needs to go in another direction altogether. Firm-specific knowledge investments are, like financial investments, not ex ante contractible, leaving investors open to exploitation by shareholders. Employees therefore refuse to make firm-specific investments. To gain a sustainable competitive advantage, there must be an incentive to undertake such firm-specific investments. Three proposals are advanced to deal with this dilemma: (1) The board should rely more on insiders. (2) The insiders should be elected by those employees of the firm who are making firm-specific knowledge investments. (3) The board should be chaired by a neutral person. These proposals have major advantages: they provide incentives for knowledge investors; they countervail the dominance of executives; they encourage intrinsic work motivation and loyalty to the firm by strengthening distributive and procedural justice, and they ensure diversity on the board while lowering transaction costs. These proposals for reforming the board may help to overcome the crisis corporate governance is in. At the same time, they provide a step in the direction of a more adequate theory of the firm as a basis for corporate governance.

 

 

Osterloh, M., &Frey, B. S. (2006). Shareholders should welcome knowledge workers as directors. Journal of Management &Governance, 10(3), 325-345.

https://doi.org/10.1007/s10997-006-9003-4

 

 

Loewenstein, G., O& #39;Donoghue, T., &Rabin, M. (2003). Projection bias in predicting future utility. The Quarterly Journal of Economics, 118(4), 1209-1248.

People exaggerate the degree to which their future tastes will resemble their current tastes. We present evidence from a variety of domains which demonstrates the prevalence of such projection bias, develop a formal model of it, and use this model to demonstrate its importance in economic environments. We show that, when people exhibit habit formation, projection bias leads people to consume too much early in life, and to decide, as time passes, to consume more—and save less—than originally planned. Projection bias can also lead to misguided purchases of durable goods. We discuss a number of additional applications and implications.

 

 

Loewenstein, G., O’Donoghue, T., &Rabin, M. (2003). Projection bias in predicting future utility. The Quarterly Journal of Economics, 118(4), 1209-1248.

https://doi.org/10.1162/003355303322552784 

Shafir, E., Simonson, I., &Tversky, A. (1993). Reason-based choice. Cognition, 49(1-2), 11-36.

This paper considers the role of reasons and arguments in the making of decisions. It is proposed that, when faced with the need to choose, decision makers often seek and construct reasons in order to resolve the conflict and justify their choice, to themselves and to others. Experiments that explore and manipulate the role of reasons are reviewed, and other decision studies are interpreted from this perspective. The role of reasons in decision making is considered as it relates to uncertainty, conflict, context effects, and normative decision rules.

 

 

Shafir, E., Simonson, I., &Tversky, A. (1993). Reason-based choice. Cognition, 49(1-2), 11-36.

https://doi.org/10.1016/0010-0277(93)90034-S

 

 

Hsee, C. K., Zhang, J., Yu, F., &Xi, Y. (2003). Lay rationalism and inconsistency between predicted experience and decision.

Decision‐makers are sometimes depicted as impulsive and overly influenced by ‘hot’, affective factors. The present research suggests that decision‐makers may be too ‘cold’ and overly focus on rationalistic attributes, such as economic values, quantitative specifications, and functions. In support of this proposition, we find a systematic inconsistency between predicted experience and decision. That is, people are more likely to favor a rationalistically‐superior option when they make a decision than when they predict experience. We discuss how this work contributes to research on predicted and decision utilities; we also discuss when decision‐makers overweight hot factors and when they overweight cold factors.

 

 

Hsee, C. K., Zhang, J., Yu, F., &Xi, Y. (2003). Lay rationalism and inconsistency between predicted experience and decision. Journal of Behavioral Decision Making, 16(4), 257-272.

https://doi.org/10.1002/bdm.445