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      Transaction Frame Determines Preferences: Valuation of Labor by Employee and Contractor

      1 , 2 , 3

      Psychological Science

      SAGE Publications

      decision making, endowment effect

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          Abstract

          A major concern in today’s economic reality is the extent to which a sharing economy, in comparison with a traditional economy, promotes inequality. In the transformation from a traditional to a sharing economy, wage setting is replaced by contract pricing. The switch to contract trading implies that the party who carries out the labor evaluates the transaction from a buyer’s rather than a seller’s perspective. Drawing on psychological research on constructed and reference-dependent preferences, we predicted that the net valuation of work would decrease when the regimen involved contract trading. Three experiments ( N = 1,105) eliciting work valuation under the two regimens confirmed our prediction, thus pointing to a novel factor that increases inequality.

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          Most cited references 16

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          Measuring utility by a single-response sequential method.

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            The construction of preference.

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              Efficiency Wages and the Inter-Industry Wage Structure

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                Author and article information

                Journal
                Psychol Sci
                Psychol Sci
                PSS
                sppss
                Psychological Science
                SAGE Publications (Sage CA: Los Angeles, CA )
                0956-7976
                1467-9280
                30 April 2020
                June 2020
                : 31
                : 6
                : 634-643
                Affiliations
                [1 ]The Federmann Center for the Study of Rationality, The Hebrew University of Jerusalem
                [2 ]School of Education, The Hebrew University of Jerusalem
                [3 ]Guilford Glazer Faculty of Management, Ben-Gurion University of the Negev
                Author notes
                Ilana Ritov, The Hebrew University of Jerusalem, School of Education and The Federmann Center for the Study of Rationality, Jerusalem 9190501, Israel E-mail: ilana.ritov@ 123456huji.ac.il
                Amos Schurr, Ben-Gurion University of the Negev, Guilford Glazer Faculty of Management, Marcus Family Campus, P.O. Box 653, Beer-Sheva 8410501, Israel E-mail: samos@ 123456bgu.ac.il
                Article
                10.1177_0956797620916521
                10.1177/0956797620916521
                7289047
                32354257
                © The Author(s) 2020

                This article is distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 License ( https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission provided the original work is attributed as specified on the SAGE and Open Access page ( https://us.sagepub.com/en-us/nam/open-access-at-sage).

                Funding
                Funded by: Israel Science Foundation, FundRef https://doi.org/10.13039/501100003977;
                Award ID: 1068/15 and 1323/16
                Categories
                Research Articles
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                ts1

                Clinical Psychology & Psychiatry

                decision making, endowment effect

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