An Experimental Game on Entrepreneurship and Labour Protection Policy

We developed a game, in the line of experimental economics, using an expected utility framework, applied to 108 participants. Specifically, we evaluated the hypothesis that, facing uncertainty over potential employees’ skills, employers prefer a flexible labour policy rather than a protectionist one, and when the option of flexible labour contracts is not available, they choose not to undertake a business, reducing job creation. The empirical results show that 79.3% of participants prefer a flexible labour policy, as well as that when this option is excluded, some participants abstain from business undertakings - reducing job creation -, and instead become workers.