Do Job Candidates' Effort Promises Matter When the Labor Market is Competitive? Experimental Evidence

Abstract

ABSTRACT Using an experiment, we investigate whether job candidates' noncontractible effort promises increase their actual effort in the work relationship when the labor market is competitive. Due to promise-keeping preferences, individuals tend to keep promises even if doing so is costly. However, when promises can be made strategically to influence hiring decisions, it is unclear whether workers are less likely to keep their promises. We develop theory to predict that making effort promises matters even more when labor markets are competitive. We find workers promise higher effort levels when competing for jobs than when they do not, but do not keep promises to a lesser extent although the costs of promise-keeping increase with the promise size, thereby increasing the total effort provided. The results enhance our understanding of the effects of worker-employer communication during hiring, particularly in a competitive setting in which such communication is most likely to occur.