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Effort and comparison income: experimental and survey evidence

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  • Andrew E. Clark
  • David Masclet
  • Marie-Claire Villeval

Abstract

This paper considers the effect of status or relative income on work effort, combining experimental evidence from a gift-exchange game with the analysis of multi-country ISSP survey data. We find a consistent negative effect of others’ incomes on individual effort in both datasets. The individual’s rank in the income distribution is a stronger determinant of effort than is others’ average income, suggesting that comparisons are more ordinal than cardinal. In the experiment, effort is also affected by comparisons over time: those who received higher income offers or enjoyed higher income rank in the past exert lower levels of effort for a given current income and rank.

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File URL: http://eprints.lse.ac.uk/28502/
File Function: Open access version.
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 28502.

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Length: 40 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:ehl:lserod:28502

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Web page: http://www.lse.ac.uk/
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Keywords: Effort; comparison income; rank; peak-end; experiments;

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