Most widely held works by Ernst Fehr
Ökonomische Theorie der Selbstverwaltung und Gewinnbeteiligung by Ernst Fehr ( Book )
3 editions published in 1988 in German and held by 62 libraries worldwide
Does money illusion matter? : an experimental approach by Ernst Fehr ( Book )
20 editions published between 1998 and 2000 in English and No Linguistic content and held by 41 libraries worldwide
Money illusion means that people behave differently when the same objective situation is represented in nominal terms rather than in real terms. This paper shows that seemingly innocuous differences in payoff representation cause pronounced differences in nominal price inertia indicating the behavioral importance of money illusion. In particular, if the payoff information is presented to subjects in nominal terms, price expectations and actual price choices after a fully anticipated negative nominal shock are much stickier than when payoff information is presented in real terms. In addition we show that money illusion causes asymmetric effects of negative and positive nominal shocks. While nominal inertia is quite substantial and long-lasting after a negative shock, it is rather small after a positive shock.
The robustness and real consequences of nominal wage rigidity by Ernst Fehr ( Book )
9 editions published between 2000 and 2007 in English and No Linguistic content and held by 40 libraries worldwide
Money illusion and coordination failure by Ernst Fehr ( Book )
14 editions published in 2004 in 3 languages and held by 39 libraries worldwide
Economists long considered money illusion to be largely irrelevant. Here we show, however, that money illusion has powerful effects on equilibrium selection. If we represent payoffs in nominal terms, choices converge to the Pareto inefficient equilibrium; however, if we lift the veil of money by representing payoffs in real terms, the Pareto efficient equilibrium is selected. We also show that strategic uncertainty about the other players' behavior is key for the equilibrium selection effects of money illusion: even though money illusion vanishes over time if subjects are given learning opportunities in the context of an individual optimization problem, powerful and persistent effects of money illusion are found when strategic uncertainty prevails.
Fairness, incentives and contractual incompleteness by Ernst Fehr ( Book )
11 editions published in 2001 in English and No Linguistic content and held by 32 libraries worldwide
Psychologische Grundlagen der Ökonomie : über Vernunft und Eigennutz hinaus ( Book )
4 editions published between 2002 and 2003 in German and held by 31 libraries worldwide
Theories of fairness and reciprocity : evidence and economic applications by Ernst Fehr ( Book )
9 editions published between 2000 and 2001 in English and No Linguistic content and held by 30 libraries worldwide
A nation-wide laboratory : examining trust and trustworthiness by integrating behavioral experiments into representative surveys ( Book )
9 editions published between 2002 and 2003 in English and held by 28 libraries worldwide
Psychological foundations of incentives by Ernst Fehr ( Book )
9 editions published between 2001 and 2002 in English and held by 27 libraries worldwide
During the last two decades economists have made much progress in understanding incentives, contracts and organisations. Yet, they constrained their attention to a very narrow and empirically questionable view of human motivation. The purpose of this paper is to show that this narrow view of human motivation may severely limit understanding the determinants and effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and reduce the performance of agents or their compliance with rules. In addition, these motives may generate very powerful incentives themselves.
Psychologische Grundlagen der Ökonomie ( Book )
2 editions published between 2002 and 2003 in German and held by 27 libraries worldwide
Contracts as reference points - experimental evidence by Ernst Fehr ( Book )
7 editions published in 2008 in English and held by 26 libraries worldwide
In a recent paper, Hart and Moore (2008) introduce new behavioral assumptions that can explain long-term contracts and important aspects of the employment relation. However, so far there exists no direct evidence that supports these assumptions and, in particular, Hart and Moore's notion that contracts provide reference points. In this paper, we examine experimentally the behavioral forces stipulated in their theory. The evidence confirms the model's prediction that there is a tradeoff between rigidity and flexibility in a trading environment with incomplete contracts and ex ante uncertainty about the state of nature. Flexible contracts - which would dominate rigid contracts under standard assumptions - cause a significant amount of shading on ex post performance, while under rigid contracts, much less shading occurs. Thus, although rigid contracts rule out trading in some states of the world, parties frequently implement them. While our results are broadly consistent with established behavioral concepts, they cannot easily be explained by existing theories. The experiment appears to reveal a new behavioral force: ex ante competition legitimizes the terms of a contract, and aggrievement and shading occur mainly about outcomes within the contract.
Screening, competition, and job design: economic origins of good jobs by Björn Bartling ( )
6 editions published in 2010 in English and German and held by 24 libraries worldwide
In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These "high-performance work systems" are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees.
Appropriating the commons a theoretical explanation by Armin Falk ( Book )
7 editions published between 2000 and 2001 in English and No Linguistic content and held by 24 libraries worldwide
Fairness and retaliation: the economics of reciprocity by Ernst Fehr ( Book )
4 editions published in 2000 in English and held by 22 libraries worldwide
Foundations of human sociality economic experiments and ethnographic evidence from fifteen small-scale societies by Joseph Patrick Henrich ( Book )
1 edition published in 2004 in English and held by 21 libraries worldwide
A theory of fairness, competition and cooperation by Ernst Fehr ( Book )
5 editions published between 1998 and 1999 in English and held by 21 libraries worldwide
Fairness and the optimal allocation of ownership rights by Ernst Fehr ( Book )
6 editions published in 2005 in English and No Linguistic content and held by 18 libraries worldwide
We report on several experiments on the optimal allocation of ownership rights. The experiments confirm the property rights approach by showing that the ownership structure affects relationship-specific investments and that subjects attain the most efficient ownership allocation despite starting from different initial conditions. However, in contrast to the property rights approach, the most efficient ownership structure is joint ownership. These results are neither consistent with the self-interest model nor with models that assume that all people behave fairly, but they can be explained by the theory of inequity aversion that focuses on the interaction between selfish and fair players.
Is strong reciprocity a maladaptation? : on the evolutionary foundations of human altruism by Ernst Fehr ( Book )
6 editions published in 2003 in English and held by 18 libraries worldwide
In recent years a large number of experimental studies have documented the existence of strong reciprocity among humans. Strong reciprocity means that people willingly repay gifts and punish the violation of cooperation and fairness norms even in anonymous one-shot encounters with genetically unrelated strangers. We provide ethnographic and experimental evidence suggesting that ultimate theories of kin selection, reciprocal altruism, costly signaling and indirect reciprocity do not provide satisfactory evolutionary explanations of strong reciprocity. The problem of these theories is that they can rationalize strong reciprocity only if it is viewed as maladaptive behavior whereas the evidence suggests that it is an adaptive trait. Thus, we conclude that alternative evolutionary approaches are needed to provide ultimate accounts of strong reciprocity.
Caste and punishment the legacy of caste culture in norm enforcement by Karla Ruth Hoff ( )
4 editions published in 2009 in English and held by 17 libraries worldwide
Well-functioning groups enforce social norms that restrain opportunism, but the social structure of a society may encourage or inhibit norm enforcement. This paper studies how the exogenous assignment to different positions in an extreme social hierarchy - the caste system - affects individuals' willingness to punish violations of a cooperation norm. Although the analysis controls for individual wealth, education, and political participation, low-caste individuals exhibit a much lower willingness to punish norm violations that hurt members of their own caste, suggesting a cultural difference across caste status in the concern for members of one's own community. The lower willingness to punish may inhibit the low caste's ability to sustain collective action and so may contribute to its economic vulnerability.
The Development of Egalitarianism, Altruism, Spite and Parochialism in Childhood and Adolescence by Ernst Fehr ( Book )
4 editions published in 2011 in English and German and held by 17 libraries worldwide
We study how the distribution of other-regarding preferences develops with age. Based on a set of allocation choices, we can classify each of 717 subjects, aged 8 to 17 years, as either egalitarian, altruistic, or spiteful. Varying the allocation recipient as either an in-group or an out-group member, we can also study how parochialism develops with age. We find a strong decrease in spitefulness with increasing age. Egalitarianism becomes less frequent, and altruism much more prominent, with age. Women are more frequently classified as egalitarian than men, and less often as altruistic. Parochialism first becomes significant in the teenage years.
Agency (Law) Altruism Altruism--Mathematical models Case studies Collective bargaining--Econometric models Competition Contracts Contracts--Econometric models Contracts--Psychological aspects Cooperation--Mathematical models Drinking vessels Economics Economics--Psychological aspects Empathy Ethics, Evolutionary Fairness Game theory Gifts Home ownership Incentive (Psychology) Incentive awards Incentives in industry Incomplete contracts Industrial management Interest (Ownership rights) Labor contract Management--Employee participation Markets--Mathematical models Minimum wage Money illusion Money--Mathematical models Moral hazard Negotiation Oxytocin Prices Profit-sharing Psychology Purchasing power Reciprocity (Commerce) Reliability Social interaction Social norms Sociobiology Telepathy Trust Unemployment Unemployment--Effect of wages on Wage-price policy Wages Warehouses
Fehr, E. 1956-