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Social reference points and real-effort provision

Author

Listed:
  • Patrick Maus

    (University of Nottingham)

  • Maria Montero

    (University of Nottingham)

  • Martin Sefton

    (University of Nottingham)

Abstract

We report a laboratory experiment testing whether social reference points impact effort provision. Subjects are randomly assigned the role of worker or peer and the worker observes the peer’s earnings before participating in a real-effort task. Between treatments, we exogenously manipulate peer earnings. We find that the workers recall the earnings of their peer and are less satisfied with their own earnings when their peer earns more. Despite this, we do not observe a treatment effect in effort choices. Thus, although our subjects appear to care about income differentials, this does not translate to a change in behavior in our incentivized environment. We relate our results to recent studies of inequality and effort provision.

Suggested Citation

  • Patrick Maus & Maria Montero & Martin Sefton, 2023. "Social reference points and real-effort provision," Discussion Papers 2023-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    • Handle: RePEc:not:notcdx:2023-03
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    References listed on IDEAS

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    Keywords

    social comparisons; reference-dependent preferences; real-effortprovision; inequity aversion; relative income concerns;
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