The Relationship between Psychological Contract Breach and Discretionary Effort as Economic Behavior in the Workplace : The Cost of Broken Promises

This study examined the relationship between psychological contract fulfillment and economic behavior among 400 full-time employees in the private sector. Using a cross-sectional survey design, data were collected on psychological contract breach, organizational trust, risk aversion, and discretionary effort expenditure. Descriptive statistics showed moderate levels of psychological contract fulfillment (M = 3,12; SD = ,78). Correlation analysis revealed a significant negative relationship between psychological contract breach and economic behavior measured as discretionary effort (r = -,54, p < ,001). Regression analysis indicated that psychological contract breach predicted reduced effort allocation (β = -,47, p < ,001). Structural Equation Modeling confirmed that organizational trust partially mediated this relationship (indirect effect = -,19, p < ,01). The results support integration of social exchange theory and behavioral economic models of reciprocity. Implications for organizational behavior and personnel economics are discussed.