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Relative Earnings and Giving in a Real-Effort Experiment

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  • Nisvan Erkal
  • Lata Gangadharan
  • Nikos Nikiforakis

Abstract

This paper investigates the relationship between relative earnings and giving in a twostage, real-effort experiment. In the first stage, four players compete in a tournament that determines their earnings. In the second stage, they decide whether they wish to transfer part of their earnings to one or more of their group members. Our main finding is that those who are ranked first are significantly less likely to give than those who are ranked second. This non-monotonic relationship between earnings and likelihood of giving disappears if individual earnings are randomly determined or if individuals learn about the second (transfer) stage only after they earn their income. These results suggest that the non-monotonic relationship detected may be driven by differences in individuals’ expectations about others’ behavior in the second stage, which are correlated with their own willingness to give.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1067.

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Length: 44 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:mlb:wpaper:1067

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Web page: http://www.economics.unimelb.edu.au
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Related research

Keywords: Relative income; Altruism; Real effort; Self-selection; Luck;

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References

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Citations

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Cited by:
  1. Timothy N. Cason & Lata Gangadharan & Nikos Nikiforakis, 2010. "Can Real-Effort Investments Inhibit the Convergence of Experimental Markets?," Purdue University Economics Working Papers 1232, Purdue University, Department of Economics.
  2. Loukas Balafoutas & Rudolf Kerschbamer & Matthias Sutter, 2011. "Distributional Preferences and Competitive Behavior," Working Papers 2011-04, Faculty of Economics and Statistics, University of Innsbruck.
  3. Jared Rubin & Roman Sheremeta, 2012. "Principal-Agent Settings with Random Shocks," Working Papers 12-21, Chapman University, Economic Science Institute.
  4. Nejat Anbarci & Nick Feltovich, 2012. "How responsive are people to changes in their bargaining position? Earned bargaining power and the 50–50 norm," Economics Series 2012_6, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  5. Pedro Rey-Biel & Roman Sheremeta & Neslihan Uler, 2011. "(Bad) Luck or (Lack of) Effort?: Comparing Social Sharing Norms between US and Europe," Working Papers 584, Barcelona Graduate School of Economics.
  6. Utteeyo Dasgupta & Subha Mani & Lata Gangadharan & Pushkar Maitra & Samyukta Subramanian, 2012. "Choosing to be Trained: Evidence from a Field Experiment," Fordham Economics Discussion Paper Series dp2012_01, Fordham University, Department of Economics.
  7. Neslihan Uler, 2011. "Public goods provision, inequality and taxes," Experimental Economics, Springer, vol. 14(3), pages 287-306, September.

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