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Social Comparison and Performance: Experimental Evidence on the Fair Wage-Effort Hypothesis

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  • Simon Gaechter

    () (University of Nottingham)

  • Christian Thoeni

    () (University of St. Gallen)

Abstract

We investigate the impact of wage comparisons for worker productivity. We present three studies which all use three-person gift-exchange experiments. Consistent with Akerlof and Yellen's (1990) fair wage-effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts on average. Two studies allow us to measure wage comparison effects at the individual level. We observe strongly heterogeneous wage comparison effects. We also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences.

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Bibliographic Info

Paper provided by The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham in its series Discussion Papers with number 2009-23.

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Date of creation: Nov 2009
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Handle: RePEc:not:notcdx:2009-23

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Fax: (0115) 951 4159
Web page: http://www.nottingham.ac.uk/economics/cedex/
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Keywords: fair wage-effort hypothesis; wage comparison; gift exchange; horizontal fairness; discrimination;

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References

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Citations

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Cited by:
  1. Ghazala Azmat & Nagore Iriberri, 2012. "The Provision of Relative Performance Feedback Information: An Experimental Analysis of Performance and Happiness," CEP Discussion Papers dp1116, Centre for Economic Performance, LSE.
  2. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2010. "Peer Effects In Pro-Social Behavior: Social Norms Or Social Preferences?," Discussion Papers 2010-23, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  3. Christian Thoeni & Simon Gaechter, 2011. "Peer Effects and Social Preferences in Voluntary Cooperation," Discussion Papers 2011-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  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. Charness, Gary & Masclet, David & Villeval, Marie Claire, 2013. "The Dark Side of Competition for Status," University of California at Santa Barbara, Economics Working Paper Series qt3858888w, Department of Economics, UC Santa Barbara.
  6. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2011. "Wage transparency and performance: A real-effort experiment," Economics Letters, Elsevier, vol. 111(3), pages 236-238, June.
  7. Casoria Fortuna & Riedl Arno, 2012. "Experimental labor markets and policy considerations: Incomplete contracts and macroeconomic aspects," Research Memoranda 058, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
  8. Abeler, Johannes & Altmann, Steffen & Goerg, Sebastian & Kube, Sebastian & Wibral, Matthias, 2011. "Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics," IZA Discussion Papers 5727, Institute for the Study of Labor (IZA).
  9. David Masclet & Emmanuel Peterle & Sophie Larribeau, 2012. "Gender Differences in Competitive and Non Competitive Environments: An Experimental Evidence," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201236, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  10. Daniele Nosenzo, 2012. "Pay Secrecy and effort provision," Discussion Papers 2012-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

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