Introduction
Described as the economic field that deals with the analysis of the effect that the process of decision making impacts on the decisions reached, behavioral economics is a field that has elicited lots of interest from various scholars (Altman, 24). The economists consider this branch of economics as cognitive science due to the fact that it deals with analysis of the process of decision making. Eric Wanner one of the earlier founders of the discipline describes this economic field as a component of cognitive science in his attempt to explain the basis and the characteristic analysis of the discipline in terms of strengths and weaknesses. Simply put it is a field of economic that explains the decision making process of economic agents based on theories formulated in its different branches (Altman, 25-26). Behavioral economics is a diverse subject dealing with numerous topics but for purposes of this research paper, my focus will be on the labor market; fairness and reciprocity. Employees as well as their employers have financial interests for which they desire to achieve from their entry into the labor market or the industry for which the employers are recruiting employee (Altman, 29-30). The employee will always seem to reciprocate any extra pay from the employer with additional input whereas the employer will give incentives to encourage extra output.
Literature review
Neo-economists describe the labor market as one having employees who work for a wage and employers who pay wages for the work performed. Arkelof theory on fair wage stated that for an employer to pay extra money to the employee the employee always viewed the extra money as mere compensation for the above average work that they performed (Colin, 2010...
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...effort in the tasks they perform. Fairness by the employer is the determinant in the level of output from an employee. The essay has also illustrated the impact that fairness and reciprocity has on the nature or mix of employment contracts that an employer decides to employ for the different tasks performed by the different employees. There are two classes of employee; some employees fall in the category of fair employees while the rest are trust employee. Most employees however are fair employees who expect fair treatment from their employers in order for them to reciprocate the generosity with increased output. The most popular kind of engagement is the bonus reward system. Further research needs to be carried out in determination of the relationship between fairness and reciprocity in the labor market and demand of goods of high quality at the product market.
The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed. The Chief decided that they would use clam shell for currency instead of trading.
I find The Behavioral model similar to the hospice philosophy, in which the focus is on holistic care. Johnson's model is influenced by the biological, psychological and social factors and focuses on the needs that are common to people. Therefore, the importance to maintain and restore the balance in stressful situations can be challenging! The model's subsystems, structural and functional components all integrate enabling the nurse to understand the patient's behavior. As an example, some dying patients will present hostility and resentment toward nurses and doctors. Then, it is obvious to understand that these dying patients are displacing a defense mechanism as a protection for the fears that they cannot express.
... ie, imperfectly competitive labour-market conditions in which there is but a single buyer of low-wage labour (or a colluding band of buyers) that is able to set wages at a level workers have little choice but to accept. Good old Econ 101 shows that under such conditions, a bump in the minimum wage, within a certain range, can boost employment and enhance efficiency.” (W, W. 1)
... middle of paper ... ... Works Cited Elwell, Craig. A. The Real Minimum Wage.
However Lowenstein says that “there is a strong economic and moral case for a slow and steady increase”. The free market argument suggests that the classic supply and demand model that is taught in economics 101 is not representative of the way in which a labor market behaves. People behave according to what economists and Nobel Prize winner Daniel Kahneman, co-authored with Jack Knetsch and Richard Thaler wrote in a paper in 1986 which suggested that there is a notion of fairness that drives the way in which workers accept different wage levels. There is no what is called the reservation wage, which means that a bricklayer, for example, will have a lower wage that is acceptable than a doctor. There is a neutral reference point which affects the way in which workers will accept or not accept employment. In a similar fashion, during a minimum wage hike employees will feel that they are underpaid if they do not gain above the minimum wage when they were working above the minimum wage previous to the
‘Why Are There People Who Cannot Find a Job?’ is the question Akerlof and Shiller wish to tackle in chapter eight. In this chapter, they focus on the idea of fairness in their theory of Animal Spirits then conclude that low wages which workers consider unfair will reduce their productivity.
Neo-classical economics assumes that workers and employers are perfectly rational and that labor markets function efficient...
The culture of appreciating employees for their hard work and achievements by incentives shows how the organization values their employees. Lincoln believed “Status is of great importance in all human relationships. The greatest incentive that money has, usually, is that is it a symbol of success... The resulting status is the real incentive... Money alone can be an incentive to the miser only. There must be complete honesty and understanding between the hourly worker and management if high efficiency is to be obtained”. This shows how harmoniously the labor and management have to work together to produce
since the existence of the mind could not be proven from the observation of behavior,
Author Greg IP, describes real pay as the amount an individual makes in monetary terms after accounting for inflation. The logic behind this theory is that “the more a worker produces for his employer, the more he’ll earn” (Ip, 2013, p. 58). Greg Ip, provides an example of this theory and its dilemma in his book titled The Little Book of Economics: How the Economy Works in the Real World. Greg Ip, states that “someone with a backhoe can dig more than someone with a shovel”, therefore it may be expected that the employee who produces more is compensated respectively (Ip, 2013, p. 58). However, the employment world does not always guarantee that the highly productive employee will benefit more than the employee with less productivity and often it is the “employer” who gains the capital profitability in this employment agreement and other times it is even the consumer of the product or
Staff behaviors control the performance and capabilities of an organization. Most workers display productive or counterproductive productive behaviors that have effect on workers, clients, and programs. The ability to control these behaviors is a necessary part of delivering exceptional services. Many workers automatically adopt behaviors that fit in with the best interest of the organization. Although these behaviors are common, some employees fail to follow order and create havoc for others around them. Productive behavior allows workers to perform daily functions whereas counterproductive behaviors develop issues that are costly. Good behavior contributes to goals and objectives set by the organization (Britt & Jex, 2008).
Economics is probably the science that arguably has had the most impact in today’s times. In fact it can barely be called a science in a strict sense, since human behavior is not governed by laws of nature unlike other non living objects, which makes the prediction and forecasting stock prices, economic conditions all the more difficult. In recent decades economists have tried to give a more structured and mathematical explanation to their theories concerning how human beings make their decisions. However these theories have come under immense criticism as they don’t hold true in real time. In reality, human beings rarely behave rationally which is the basic assumption in many of the economic theories; rather we make a lot of our decisions based on our intuition and limited knowledge available to us. When the financial crisis of 2008 came upon us, a lot of questions were raised on the apparent predictive abilities of the various economic theories. Merely 12 economists were able to foresee the massive crisis which now shows signs of deepening into a double dip recession.
...onship between the employer and the employee. Employers who recognize this and proactively use strategies to promote employee involvement and fair employment practices will be likely to reap the organizational rewards of doing so.
Holland Enterprises is on an innovative planned trend, to invite and maintain the utmost talented employees and to decrease opportunity. The Human Resource Department had the responsibility that has initiated a winning team with a different compensation strategy. The compensation strategy contains of financial pay, and in thoughtful rights of imports and amenities. Holland Enterprise employer’s duties guarantee that their drivers recognize that they are motivation, they obtain the implements they want to be effective in their employment with Holland Enterprises. Their obligation founds an idea and marks accurate potentials.
In large organisation, competition is not only in the market for goods and services but also for the quality of employees. As such, a large organization can only become attractive to the most skilled and high quality workers if it has an effective compensation and benefit plan. The key purpose of an effective compensation and benefit system is to provide employees with the right rewards for their work and right behavior in the workplace. Typically, organizational success is determined by the quality of employees an organization has. In turn, the organization can only attract such quality workers and maintain them through effective compensation and benefit