How does the preference for increasing payments depend on the size and source of the payments?

Management Science Letters. 2015;5(12):1071-1080 DOI 10.5267/j.msl.2015.10.007

 

Journal Homepage

Journal Title: Management Science Letters

ISSN: 1923-9335 (Print); 1923-9343 (Online)

Publisher: Growing Science

LCC Subject Category: Social Sciences: Commerce: Business: Business records management

Country of publisher: Canada

Language of fulltext: English

Full-text formats available: PDF

 

AUTHORS

Sean Duffy
John Smith
Kristen Woods

EDITORIAL INFORMATION

Peer review

Editorial Board

Instructions for authors

Time From Submission to Publication: 20 weeks

 

Abstract | Full Text

It is well-known that subjects can exhibit a preference for increasing payments. Smith (2009a) [Smith, J. (2009a). Imperfect Memory and the Preference for Increasing Payments. Journal of Institutional and Theoretical Economics, 165(4), 684-700.] makes a related prediction that the difference between the preference for increasing wage payments and the preference for increasing non-wage payments will be largest for intermediate payments. We find evidence consistent with this prediction. Consistent with previous experiments, we find that the preference for increasing payments is increasing in the size of the payments. Also consistent with the literature, we find that the preference for increasing wage payments is stronger than the preference for non-wage payments. Our results contribute to the understanding of the optimal sequencing of wage payments over time.