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- catalog abstract "In this paper, we explore the issue of people's unwillingness to make wage concessions even when the wage cut is economically superior to any outside alternative. We show that when an employer asks for concessions that would result in wages below the status quo, people prefer to switch to a new lower-paying job with a new employer rather than making the concession to their current employer. In a series of four studies, we uncover the sources of this behavior. Our studies show that concession aversion occurs only when the negotiation involves the current employer, not a new employer, and that risk-seeking is not the explanation. Concession aversion is due, in part, to future signaling concerns - people are afraid that the request for a cut in pay signals the beginning of a downward spiral. Beyond signaling concerns, though, we find that employees' perceptions of a breach in the employment relationship underlie their aversion to concessions - employees perceive that the employment relationship has soured and are unwilling to continue in it. We contrast relationship concerns with an outcome fairness argument: that people are turning down offers because they perceive them to be unfair. We find that perceptions of breach mediate the effects of outcome fairness on the decision to stay or leave the current employer.".
- catalog contributor b11405820.
- catalog contributor b11405821.
- catalog contributor b11405822.
- catalog contributor b11405823.
- catalog created "c1999.".
- catalog date "1999".
- catalog date "c1999.".
- catalog dateCopyrighted "c1999.".
- catalog description "In this paper, we explore the issue of people's unwillingness to make wage concessions even when the wage cut is economically superior to any outside alternative. We show that when an employer asks for concessions that would result in wages below the status quo, people prefer to switch to a new lower-paying job with a new employer rather than making the concession to their current employer. In a series of four studies, we uncover the sources of this behavior. Our studies show that concession aversion occurs only when the negotiation involves the current employer, not a new employer, and that risk-seeking is not the explanation. Concession aversion is due, in part, to future signaling concerns - people are afraid that the request for a cut in pay signals the beginning of a downward spiral. Beyond signaling concerns, though, we find that employees' perceptions of a breach in the employment relationship underlie their aversion to concessions - employees perceive that the employment relationship has soured and are unwilling to continue in it. We contrast relationship concerns with an outcome fairness argument: that people are turning down offers because they perceive them to be unfair. We find that perceptions of breach mediate the effects of outcome fairness on the decision to stay or leave the current employer.".
- catalog description "Includes bibliographical references (p. 39-43).".
- catalog extent "56 p. ;".
- catalog isPartOf "Working paper (Harvard University. Graduate School of Business Administration. Division of Research) ; 00-026.".
- catalog isPartOf "Working paper / Division of Research, Harvard Business School ; 00-026".
- catalog issued "1999".
- catalog issued "c1999.".
- catalog language "eng".
- catalog publisher "[Boston] : Division of Research, Harvard Business School,".
- catalog title "Concession aversion : a story of loss and betrayal / Victoria Husted Medvec, Kathleen L. Valley, Richard Thaler.".
- catalog type "text".