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

Ilana Ritov, Amos Schurr

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

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.

Original languageEnglish
Pages (from-to)634-643
Number of pages10
JournalPsychological Science
Volume31
Issue number6
DOIs
StatePublished - 1 Jun 2020

Keywords

  • decision making
  • endowment effect

ASJC Scopus subject areas

  • Psychology (all)

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