How workers respond to wage cuts. Refer to the Institute for the Study of Labor: Discussion Paper Series (Mar. 2011)

study of how workers respond to wage cuts, Exercise 10.31

(p. 552). Recall that teams of workers were divided into three wage cut groups: “unilateral wage cut,” “general wage cut,” and “baseline” (no wage cut). The researchers determined that the average decrease in promotional cards sold differed depending on the wage cut treatment group.

Now the researchers want to rank the treatment means by making all possible pairwise comparisons.

a. How many pairwise comparisons make up this phase of the study? List them.

b. Why is a multiple comparisons procedure like Tukey’s recommended for the analysis?

c. The confidence interval for the difference between the means for “baseline” and “general wage cut,” i.e., for 1mbaseline - mgeneral2, includes only positive values.

Interpret this result.