Category: Behavioral Approaches

Navigating the Autonomy-Interdependence Paradox: Achieving Temporal Flexibility through Workplace Relationships in Professional Services

May 14th, 2012 in Behavioral Approaches, Research Day

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Emily Heaphy

Organizational Behavior

Authors: Emily Heaphy and Spela Trefalt

Research on how professionals achieve temporal flexibility—the ability of individuals to adjust their work schedules to accommodate their personal needs and interests—has emphasized the benefits of formal organizational policies, yet typically such policies are underutilized or even resisted. In a qualitative study of a team-based professional services firm, we investigate how professionals achieve temporal flexibility outside of formal organizational policies. We find that professionals must navigate what we call the autonomy-interdependence paradox, in which a rhetoric of individual autonomy conflicts with the reality of highly interdependent work. Professionals manage this paradox by drawing on their workplace relationships. Consultants carefully architected opportunities to work with others with whom they knew they would be able to experience temporal flexibility, while avoiding those with whom they knew they would not, thereby constructing a relational context that supported temporal flexibility. Once in those relationships, they co-constructed temporal flexibility through practices of interpersonal treatment, project management, and signaling temporal flexibility. This study contributes to research on temporal flexibility, relational perspectives on professional work, and the sociology of work time.

Helping Consumers Get Out of Debt Faster: How Debt Repayment Strategies Affect Motivation to Repay Debt

May 14th, 2012 in Behavioral Approaches, Research Day

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Remi Trudel

Marketing

Authors: Remi Trudel, Keri Kettle, and Gerald Haubl

The US Federal Reserve estimates that US consumers have $791 billion in revolving debt, 98% of which is credit card debt. It is clear that consumer debt is a problem. Moreover, consumers with problematic levels of debt—i.e., those of greatest concern—tend to have their financial liabilities distributed across multiple debt accounts. Consumers with multiple debts can choose among different strategies for paying down their debt accounts. In particular, they can repay their accounts sequentially (one at a time) or simultaneously (allocating money to each account). We believe that there is a consequence to this decision and examine how the order in which debt is repaid influences the motivation of consumers to pay off their debts. Across 4 experimental studies, we demonstrate that paying down debt accounts sequentially (versus simultaneously) increases the motivation of low self-control consumers—precisely those who have difficulty achieving long-term goals (Baumeister et al. 2007) and are most likely to have debt in the first place (Meier & Sprenger 2012). This effect persists whether the strategy is chosen or assigned, is strengthened by expert recommendation, and is moderated by the attainability of getting out of debt. The results are compelling and have important public policy implications.

Expectations as Endowments: Evidence on Reference-Dependent Preferences from Exchange and Valuation Experiments

May 14th, 2012 in Behavioral Approaches, Research Day

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Keith M. Marzilli Ericson

Markets, Public Policy and Law

Authors: Keith M. Marzilli Ericson and Andreas Fuster

Evidence from a variety of settings indicates that people are loss averse: they dislike losses much more than they enjoy equal-sized gains. Yet little is known about the determination of the reference points relative to which gains and losses are defined. Kahneman and Tversky’s highly influential prospect theory, where loss aversion was first introduced, left the reference point imprecise. It has often been taken to be the status quo. However, we conduct two experiments that show that reference points are determined, at least in part, by expectations about future outcomes. In an exchange experiment, we endow subjects with an item and randomize the probability they will be allowed to trade. Subjects that are less likely to be able to trade are more likely to choose to keep their item. In a valuation experiment, we randomly assign subjects a high or low probability of obtaining an item and elicit their willingness-to-accept for it. The high probability treatment increases valuation of the item by 20–30%. These results imply that firms and policy makers can benefit from “expectations management,” as they may face less resistance against a price or policy change if it was expected than if it comes as a surprise.

Out-of-Court Settlements

May 14th, 2012 in Behavioral Approaches, Research Day

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William Samuelson

Markets, Public Policy and Law

Author: William Samuelson

This paper considers the incidence of out-of-court negotiated settlements versus adjudicated outcomes as predicted by a number of game-theoretic models. A number of questions are addressed: How do varying offer and acceptance methods effect the terms of out-of-court settlements? In favor of which side? Which kinds of cases settle and which go to court? How does the expected court outcome (including legal costs and possibly reputation costs) affect the terms and likelihood of an out-of-court settlement? How does private information about the case merits held by one or more sides affect player strategies and outcomes? Among other results, we show that the strategic behavior of the disputants combined with asymmetric information about the value of the case constitutes a road block to achieving a first-best, ideal settlement mechanism. There is an inevitable trade-off between efficiency and equity. In equilibrium, out-of-court settlements can save all or some part of the costs of going to court, but are unable to mimic perfectly those court outcomes.