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Research Note—Are Online Labor Markets Spot Markets for Tasks? A Field Experiment on the Behavioral Response to Wage Cuts

Author

Listed:
  • Daniel L. Chen

    (Institute for Advanced Study, Toulouse School of Economics, 31015 Toulouse Cedex 6, France)

  • John J. Horton

    (Stern School of Business, New York University, New York, New York 10012)

Abstract
In some online labor markets, workers are paid by the task, choose what tasks to work on, and have little or no interaction with their (usually anonymous) buyer/employer. These markets look like true spot markets for tasks rather than markets for employment. Despite appearances, we find via a field experiment that workers act more like parties to an employment contract: workers quickly form wage reference points and react negatively to proposed wage cuts by quitting. However, they can be mollified with “reasonable” justifications for why wages are being cut, highlighting the importance of fairness considerations in their decision making. We find some evidence that “unreasonable” justifications for wage cuts reduce subsequent work quality. We also find that not explicitly presenting the worker with a decision about continuing to work eliminates “quits,” with no apparent reduction in work quality. One interpretation for this finding is that workers have a strong expectation that they are party to a quasi-employment relationship where terms are not changed, and the default behavior is to continue working.

Suggested Citation

  • Daniel L. Chen & John J. Horton, 2016. "Research Note—Are Online Labor Markets Spot Markets for Tasks? A Field Experiment on the Behavioral Response to Wage Cuts," Information Systems Research, INFORMS, vol. 27(2), pages 403-423, June.
    • Handle: RePEc:inm:orisre:v:27:y:2016:i:2:p:403-423
    DOI: 10.1287/isre.2016.0633
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    References listed on IDEAS

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