Document Type

Article

Publication Date

11-2-2023

Abstract

Pre-play non-binding communication in organizations is prevalent. We study the implications of pre-play, private and public, wage proposals in labor markets. To that end, we develop a theoretical model from which we derive certain hypothesis that we test through a laboratory experiment. In the baseline, that depicts a typical labor market interaction, the employer makes a wage offer to the worker who may then accept or reject it. In subsequent treatments, workers, moving first, make private, non-binding, wage proposals to the employer. In a following treatment, the proposals are made public. Our findings suggest that both private and public wage proposals promote higher wages, efficiency, and income equality. Public information on wage proposals benefits firms more than workers while, workers benefit more under private proposals where income inequality is the lowest. We find some support in our data on workers conforming to their co-workers’ wage proposals when these are public. Finally, the gender gap observed in the baseline on acceptance rates and workers’ income vanishes when proposals are present.

Comments

This article was originally published in Journal of Economic Behavior & Organization, volume 216, in 2023. https://doi.org/10.1016/j.jebo.2023.10.006

Peer Reviewed

1

Copyright

The authors

Creative Commons License

Creative Commons License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License

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