Behavioral Economics Essay -- Neo-economists, Labor Market

IntroductionDescribed as the stinting arena that deals with the analysis of the effect that the process of decision making tints on the decisions reached, behavioral economics is a field that has elicited lots of inte sopor from several(a) scholars (Altman, 24). The economists consider this branch of economics as cognitive apprehension imputable to the fact that it deals with analysis of the process of decision making. Eric Wanner one of the earlier founders of the coach describes this economic field as a component of cognitive science in his attempt to explain the basis and the characteristic analysis of the check up on 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 conjecture in its different branches (Altman, 25-26). Behavioral economics is a diverse submit dealing with numerous topics but for purposes of this research paper, my focus will be on the labor foodstuff fairness and reciprocity. Employees as well as their employers have financial interests for which they desire to achieve from their entry into the labor mart or the industry for which the employers are recruiting employee (Altman, 29-30). The employee will always seem to satisfy any extra remuneration from the employer with additional input whereas the employer will put across incentives to encourage extra output.Literature reviewNeo-economists describe the labor market as one having employees who work for a wage and employers who pay hire 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 guiltless compensation for the above average work that they performed (Colin, 2010... ...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 craft contracts that an employer decides to employ for the different tasks performed by the different employees. There are cardinal 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 anticipate fair treatment from their employers in order for them to reciprocate the generosity with increase output. The most popular kind of engagement is the bonus reward system. encourage research needs to be carried out in determination of the relationship between fairness and reciprocity in the labor market and necessity of goods of high quality at the product market.