The utility of pay raises/cuts: A simulation experimental study

Atul Mitra; G. Douglas Jenkins; Nina Gupta; Jason DeFrance Shaw

doi:10.1016/j.joep.2015.05.003

The utility of pay raises/cuts: A simulation experimental study

Atul Mitra, G. Douglas Jenkins, Nina Gupta, Jason DeFrance Shaw

Research output: Journal article publication › Journal article › Academic research › peer-review

7 Citations (Scopus)

Abstract

Theories from the fields of psychophysics, economics, and organizational behavior are integrated to develop insights about people's attitudinal reactions to (i.e., the utility and disutility of) pay raises and pay cuts of different sizes. Linear, logarithmic, power, and quadratic functions are developed from this integration. Techniques for evaluating the empirical applicability of these utility/disutility relationships are illustrated among a sample of 192 student "employees" in an experimental simulation. The results provide a partial test of the integrated framework. The results indicate a quadratic relationship for pay raises and a linear relationship for pay cuts. Implications of these findings are discussed.

Original language	English
Pages (from-to)	150-166
Number of pages	17
Journal	Journal of Economic Psychology
Volume	49
DOIs	https://doi.org/10.1016/j.joep.2015.05.003
Publication status	Published - 1 Aug 2015

Keywords

Pay cuts
Pay raises
Utility and disutility

ASJC Scopus subject areas

Sociology and Political Science
Applied Psychology
Economics and Econometrics

More information

10.1016/j.joep.2015.05.003

Cite this

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AB - Theories from the fields of psychophysics, economics, and organizational behavior are integrated to develop insights about people's attitudinal reactions to (i.e., the utility and disutility of) pay raises and pay cuts of different sizes. Linear, logarithmic, power, and quadratic functions are developed from this integration. Techniques for evaluating the empirical applicability of these utility/disutility relationships are illustrated among a sample of 192 student "employees" in an experimental simulation. The results provide a partial test of the integrated framework. The results indicate a quadratic relationship for pay raises and a linear relationship for pay cuts. Implications of these findings are discussed.

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ER -

The utility of pay raises/cuts: A simulation experimental study

Abstract

Keywords

ASJC Scopus subject areas

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