Making trade-offs between job attributes

Abstract

Making trade-offs is an important property of rational choice behavior. Studies of the effects of income-leisure trade-offs on job search and on employment, and studies of employee's preferences among various fringe benefits and pay have implicitly made the assumption that people can make meaningful trade-off decisions. Unfortunately empirical studies of actual trade-off decisions are scarce. The present study employed a new technique which allowed the direct measurement of trade-offs between five aspects of managerial jobs: salary, authority, interest in job, influence on company's policy, and status. The theoretical framework borrows from theories of choice behavior (cf. H. A. Simon, Quarterly Journal of Economics, 1955, 69, 99–118; A. Tversky, Psychological Review, 1972, 79, 281–299) and hypothesized that trade-offs would not be made over the entire range of the attributes, and that they would be nonsymmetrical for “gains” and “losses.” Fifty-six senior executives of a large company made direct trade-off decisions between all pairs of the five aspects. The data were analyzed by means of minimizing a least squares loss function to estimate the trade-off coefficients. Indifference curves between each two attributes were drawn and revealed interesting patterns pertaining to the way people make trade-offs, which appears to be different than what is assumed under the model of rational choice behavior.