Long-term Employment Relationships by Credible Commitments the Carl Zeiss Foundation  

Oleh:

Abraham, Martin ; Prosch, Bernhard

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Rationality and Society vol. 12 no. 3 (Agu. 2000), page 283–306.
Topik: employment relationship; foundation; game theory; private institutions
Fulltext: 283RS123.pdf (111.61KB)

Isi artikel

Carl Zeiss, a famous German firm, was among the first companies to provide employee benefits. Its sole owner, a foundation known as the Carl-Zeiss–Stiftung, promised a century ago to fulfill almost revolutionary social-welfare obligations to company workers. Can this promise be explained within a model of rational behavior? Using game theory, the relationship between employer and employee can be reconstructed as a Prisoner’s Dilemma, in which both sides are interested in future cooperation but have incentives to terminate the relationship opportunistically. One possible solution is the implementation of institutionalized selfcommitments; that is, a pension fund and severance pay are ‘hostages’ that serve as incentives. Analysis indicates that the Carl-Zeiss–Stiftung can be seen as a historical example of a private-sector organization that committed itself to providing benefits to solve a basic cooperation problem. The foundation’s statute provides incentives for the both employer and employees to establish a long-term employment relationship. In fact, this was exactly the intention of the founder, Ernst Abbe.

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