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Psychology at work

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  • Philippe Grégoire

    (Université Laval)

Abstract

We compare three wage–effort psychological games. In the first game, the agent’s motivation hinges on a degree of altruism influenced by the surprise generated by the principal’s wage offer. The agent works harder when the wage is greater than expected and vice versa when the wage is smaller than expected. Consistent equilibrium beliefs oblige the principal to randomize in order to surprise the agent, which results in the principal being worse off than if she were dealing with an unemotional agent. We then consider an intention-based reciprocity model and a model of guilt aversion. We find that guilt aversion may potentially yield the best outcome for the principal.

Suggested Citation

  • Philippe Grégoire, 2018. "Psychology at work," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 65(2), pages 119-135, June.
    • Handle: RePEc:spr:inrvec:v:65:y:2018:i:2:d:10.1007_s12232-017-0286-3
    DOI: 10.1007/s12232-017-0286-3
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    More about this item

    Keywords

    Reciprocal altruism; Reciprocity; Wage–effort game; Psychological game;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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