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Desert and Inequity Aversion in Teams

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  • David Gill
  • Rebecca Stone

Abstract

Teams are becoming increasingly important in work settings.� We develop a framework to study the strategic implications of a meritocratic notion of desert under which team members care about receiving what they feel they deserve.� Team members find it painful to receive less than their perceived entitlement, while receiving more may induce pleasure or pain depending on whether preferences exhibit desert elation or desert guilt.� Our notion of desert generalizes distributional concern models to situations in which effort choices affect the distribution perceived to be fair; in particular, desert nests inequity aversion over money net of effort costs as a special case.� When identical teammates share output equally, desert guilt generates a continuum of symmetric equilibria.� Equilibrium effort can lie above or below the level in the absence of desert, so desert guilt generates behavior consistent with both positive and negative reciprocity and may underpin social norms of cooperation.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 563.

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Date of creation: 01 Aug 2011
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Handle: RePEc:oxf:wpaper:563

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Keywords: Desert; deservingness; equity; inequity aversion; loss aversion; reference-dependence preferences; guilt; reciprocity; social norms; team production;

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Cited by:
  1. Haoran He & Marie Claire Villeval, 2014. "Are teams less inequality averse than individuals ?," Working Papers 1417, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  2. Kohei Daido & Takeshi Murooka, 2013. "Loss Aversion, Stochastic Compensation, and Team Incentives," Discussion Paper Series 107, School of Economics, Kwansei Gakuin University, revised Jul 2013.
  3. Eisenkopf, Gerald, 2014. "The impact of management incentives in intergroup contests," European Economic Review, Elsevier, vol. 67(C), pages 42-61.

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