An experimental study into the influence of works council advice on managerial decision-making

Abstract

This paper experimentally studies the potential effect of works councils on managerial decision-making. Empirical evidence on the influence of works councils in organizations is still mixed. Therefore, this experimental study tries to gain more insights into the mechanisms that may underlie the impact of works council advice. First, we try to explain whether advice given by a works council influences the decision managers make. Second, we attempt to explain whether works councils delay the decision-making process. In order to answer these questions, we conducted experiments with undergraduate students, who played a two-player Prisoner's Dilemma price-setting game. One group received advice from a works council, whilst the other group did not. As expected, advice does have an influence on decision-making: receiving advice for setting a low price leads to a higher likelihood to set a low price as well, and receiving advice to set a high price leads to a high price decision. Female managers are more likely to take the works council advice into account. Subjects with an other-regarding orientation tend to choose a high price, even when they are advised to opt for a low price. Further, decisionmaking is not delayed by the advice, but there is an interaction effect with gender: female managers receiving advice tend to think longer about their decision.

Nonunion Employee Representation: Theory and the German Experience With Mandated Works Councils

“…While unemployment has well known negative psychological effects, re‐employment into low quality jobs – including those with low autonomy and high insecurity as well as low pay – may lead to even worse health outcomes (Chandola and Zhang ); again a key channel may be through chronic stress. It is perhaps surprising that the psychological and health dimensions of works councils appear to have been largely neglected (but see Jirjahn and Lange and Sapulete, van Witteloostuijn and Kaufmann for exceptions).…”

A systematic review of empirical studies on advice-based decisions in behavioral and organizational research.

“…In one study, more narcissistic participants utilized advice less, particularly when controlling for extraversion (Kausel et al, 2015†). Other studies have found that more agentic decision makers are more likely to dismiss advice (Schultze et al, 2018‡), that decision makers with a lower need for cognition increase their utilization more in response to emoticons in advisory messages (Duan et al, 2018‡), and that selfish decision makers are more likely to act selfishly when receiving (selfish) advice (Coffman & Gotthard-Real, 2019†; Sapulete et al, 2014†). Participants aged 60 and older utilized advice more than those between the ages of 18 and 37, and older participants with poorer working memory and fluid intelligence were less sensitive to the quality of the advice they received (Bailey et al, 2021‡).…”