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The intrinsic value of decision rights


Bartling, Björn; Fehr, Ernst; Herz, Holger (2014). The intrinsic value of decision rights. Working paper series / Department of Economics 120, University of Zurich.

Abstract

Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal - at least partly - from an assumed positive intrinsic value of decision rights. Providing clean evidence for the existence of this intrinsic value and measuring its size, however, is intricate. Here, we develop a method capable of achieving these goals. The data reveal that the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The intrinsic valuation of decision rights has potentially important consequences for corporate governance, human resource management, and optimal job design: it may explain why managers value power, why employees appreciate jobs with task discretion, why individuals sort into self-employment, and why the reallocation of decision rights is often very difficult and cumbersome. Our method and results may also prove useful in developing an empirical revealed preference foundation for concepts such as "freedom of choice" and "individual autonomy".

Abstract

Philosophers, psychologists, and economists have long argued that certain decision rights carry not only instrumental value but may also be valuable for their own sake. The ideas of autonomy, freedom, and liberty derive their intuitive appeal - at least partly - from an assumed positive intrinsic value of decision rights. Providing clean evidence for the existence of this intrinsic value and measuring its size, however, is intricate. Here, we develop a method capable of achieving these goals. The data reveal that the large majority of our subjects intrinsically value decision rights beyond their instrumental benefit. The intrinsic valuation of decision rights has potentially important consequences for corporate governance, human resource management, and optimal job design: it may explain why managers value power, why employees appreciate jobs with task discretion, why individuals sort into self-employment, and why the reallocation of decision rights is often very difficult and cumbersome. Our method and results may also prove useful in developing an empirical revealed preference foundation for concepts such as "freedom of choice" and "individual autonomy".

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C91, D03, D23
Uncontrolled Keywords:Decision rights, authority, private benefits of control
Language:English
Date:June 2014
Deposited On:23 Apr 2013 11:31
Last Modified:14 Aug 2017 12:14
Series Name:Working paper series / Department of Economics
Number of Pages:42
ISSN:1664-7041
Additional Information:Revised version, forthcoming in Econometrica
Official URL:http://www.econ.uzh.ch/static/wp/econwp120.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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