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Wage differentials and social comparison: An experimental study of interrelated ultimatum bargaining

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  • Alewell, Dorothea
  • Nicklisch, Andreas
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    Abstract

    Equal pay for equal work is discussed in many different legal and political contexts. Our study explores one consequence of this formula, the effect of social comparison for wage acceptance, in multilateral ultimatum games. The results of our laboratory experiments indicate that the availability of information concerning ultimatum offers to other responders influences acceptance behavior even if responders have differing outside options. Particularly, behavior is only partly influenced by self-regarding social comparison; that is, the probability of acceptance decreases significantly for offers that put responders at a substantial disadvantage compared with others. On the contrary, responders are also partly concerned about unfavorable discrimination against others. However, we find that in our setting, i.e. in a setting where the wage offer relation is endogenously chosen, a slightly unequal relation maximizes the joint acceptance frequency for both responders.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 29 (2009)
    Issue (Month): 3 (September)
    Pages: 210-220

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    Handle: RePEc:eee:irlaec:v:29:y:2009:i:3:p:210-220

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    Web page: http://www.elsevier.com/locate/irle

    Related research

    Keywords: Experimental economics Interrelated ultimatum bargaining Social comparison;

    References

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    Cited by:
    1. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2010. "The Impact Of Social Comparisons On Reciprocity," Discussion Papers 2010-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. Angelova, Vera & Güth, Werner & Kocher, Martin G., 2012. "Co-employment of permanently and temporarily employed agents," Labour Economics, Elsevier, vol. 19(1), pages 48-58.
    3. Christian Thöni & Simon Gächter, 2009. "Social Comparison and Performance: Experimental Evidence on the Fair Wage-Effort Hypothesis," University of St. Gallen Department of Economics working paper series 2009 2009-29, Department of Economics, University of St. Gallen.
    4. Jérémy Celse, 2009. "Will Joe the Plumber envy Bill Gates? The impact of both absolute and relative differences on interdependent preferences," Working Papers 09-26, LAMETA, Universtiy of Montpellier, revised Dec 2009.
    5. Werner Güth & Martin G. Kocher, 2013. "More than thirty years of ultimatum bargaining experiments: Motives, variations, and a survey of the recent literature," Jena Economic Research Papers 2013-035, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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