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Behavioral Issues in Operations Management pp 141–157Cite as

Incentives in Organizations: Can Economics and Psychology Coexist in Human Resources Management?

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Abstract

Several disciplines have approached Human Resources Management (HRM) from different perspectives with several authors providing interesting contributions but often ignoring each other. In this chapter, I will illustrate how Economics and Psychology approach HRM in order to point out differences but also to areas of intersection between these two important disciplines. I will mainly concentrate on Economics and Psychology, not for the sake of some alleged priority or superiority of these disciplines, but rather for being more familiar with this literature. In the future research it would be interesting to add perspectives coming from other disciplines. Psychology and Economics, as social sciences, often deal with models of human behavior. It is well known that these two disciplines offer contrasting theories of human behavior on virtually every major point (DeAngelo et al. 2011). One strong point of disagreement is rationality (Smith 1991). We will see that the contrast on rationality is not limited to Economics and Psychology. Even if the differences between these two disciplines are often stark, they both agree on incompleteness of contracts. In this chapter, I will explore how these disciplines approach this gap, what are the main differences, and the possible integrations.

I am grateful to Laura Basta, Gian-Italo Bischi, Arianna Dal Forno, Paolo Bertoletti, Denise Rousseau, Pietro Terna and Gabriella Valentino for helpful suggestions. Usual caveats apply.

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Notes

  1. 1.

    For a concise introduction to Arrow-Debrau model of general equilibrium, the reader may refer to Geanokoplos (2004).

  2. 2.

    Actually incomplete contracts are already considered in Grossman and Hart (1986).

  3. 3.

    The reader interested in a historical analysis of the psychological contract may refer to Roehling (1997); Rousseau (2010) provides also an analysis of the cognitive, emotional, and behavioral processes underlying it.

  4. 4.

    I am grateful to Gian-Italo Bischi for providing this insight.

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  1. Department of Psychology, University of Torino, Via Verdi 10, Torino, 10124, Italy

    Ugo Merlone

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  1. , Mechanics, Mathematics, & Management, Polytechnic University of Bari, viale Japigia 182, Bari, 70126, Italy

    Ilaria Giannoccaro

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Merlone, U. (2013). Incentives in Organizations: Can Economics and Psychology Coexist in Human Resources Management?. In: Giannoccaro, I. (eds) Behavioral Issues in Operations Management. Springer, London. https://doi.org/10.1007/978-1-4471-4878-4_7

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