The Intrinsic Value of Decision Rights

University of Zurich, Department of Economics Working Paper No. 120

44 Pages Posted: 2 May 2013 Last revised: 31 Jul 2014

See all articles by Björn Bartling

Björn Bartling

University of Zurich - Department of Economics; Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Ernst Fehr

University of Zurich - Department of Economics

Holger Herz

University of Fribourg - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 26, 2014

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.”

Keywords: Decision rights, authority, private benefits of control

JEL Classification: C91, D03, D23

Suggested Citation

Bartling, Björn and Fehr, Ernst and Herz, Holger, The Intrinsic Value of Decision Rights (June 26, 2014). University of Zurich, Department of Economics Working Paper No. 120. Available at SSRN: https://ssrn.com/abstract=2255992 or http://dx.doi.org/10.2139/ssrn.2255992

Björn Bartling (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Ernst Fehr

University of Zurich - Department of Economics ( email )

Blümlisalpstrasse 10
Zuerich, 8006
Switzerland
+41 1 634 3709 (Phone)
+41 1 634 4907 (Fax)

Holger Herz

University of Fribourg - Department of Economics ( email )

Fribourg
Switzerland

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