Amartya Sen, arguably the most inXuential current non-mainstream thinker in
economics, has attributed this to the increasing dominance of the ‘engineering’
approach in economics, namely the focus on logistic issues based on a given set of
simple human motives, and the associated decline of the ethics-related view of
social achievement (‘how should one live?’) (Sen 1988 ). While Smith, Mill, and
Marx embraced both ethical and engineering issues in their writings, twentieth-
century economics increasingly eschewed ethical, or normative, considerations in a
collective eVort to advance a ‘positive economics’. But the historical disjuncture
from moral philosophy has weakened the usefulness of economics. In particular,
the simpliWed assumption of self-interested maximizing behavior is problematic
(Hirschman 1970 ; Simon 1979 ). It is not clear, as Sen argues ( 1988 : 15 – 22 ), why it is
assumed all behavior other than self-interested maximizing behaviour is irrational.
Developments in game theory oVer a potentially more interesting approach but
these have not yet found their way into mainstream approaches to personnel
economics. For example, behavioral game theory assumes a ‘social utility’ func-
tion, where individuals care about what other players get as well as themselves.
Experimental tests of a range of gamesWnd evidence that players do care about the
social allocation of rewards (Camerer 1997 ), providing several possible linkages
with HRM issues concerning employee consultation and negotiation: players
cooperate because of expectations founded on the reciprocal nature of social
values; and players are more willing to accept unfair oVers when generated by a
chance device (Blount 1995 ).
HRM scholars may be less inclined than mainstream economists to assume
incentives have to be devised to correct workers’ ‘natural’ impulse to shirk. This
‘neo-Hobbesian’ approach (Bowles 1985 ) has drawn strong criticism from organ-
izational theorists:
In the economists’ view, people are assumed to be lazy, dishonest, and at odds with the goals
of managers. Although each of these assumptions may be valid in a speciWc situation, or for
a particular individual (for instance, when managing economists themselves), none is likely
to be right in most settings with normal human beings. (O’Reilly and PfeVer 2000 , cited in
Lazear 2000 )
The reply from economists would be that such assumptions are only applied at the
margin—that up to a certain level workers are happy to exert eVort for a given
wage, but beyond this level eVort becomes a bad and incentive measures are
required. Similarly, monitoring mechanisms are only needed for a speciWc part of
worker behavior that is at odds with management interests (Lazear 2000 ). How-
ever, the narrow view of human behavior, coupled with simplifying assumptions
of perfect implementation of policies, directs attention away from many of the
more interesting consequences of incentive-led HRM policies.^4 For example,
(^4) There are instances within the personnel economics approach where more of the complexity of
the world of work is acknowledged. For example, Lazear ( 1998 ) notes that output based pay shifts the
74 damian grimshaw and jill rubery