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Looking Awkward When Winning and Foolish When Losing: Inequity Aversion and Performance in the Field

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Author Info
Benno Torgler
Markus Schaffner
Bruno S.Frey
Sascha L. Schmidt

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Abstract

The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis, testing the model of inequity aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequity aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives.

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Paper provided by School of Economics and Finance, Queensland University of Technology in its series School of Economics and Finance Discussion Papers and Working Papers Series with number 230.

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Length: 29 pages
Date of creation: 16 Jun 2008
Date of revision:
Handle: RePEc:qut:dpaper:230

Note:  Benno Torgler and Markus Schaffner, The School of Economics and Finance, Queensland University of Technology, GPO Box 2434, Brisbane, QLD 4001, Australia, benno.torgler@qut.edu.au; markus.schaffner@qut.edu.au. Bruno S. Frey, Institute for Empirical Research in Economics, University of Zurich, Switzerland, bsfrey@iew.uzh.ch. Sascha L. Schmidt, European Business School, Oestrich Winkel, Germany, sascha.schmidt@ebs.de. Benno Torgler, Bruno Frey and Sascha Schmidt are also associated with CREMA – Center for Research in Economics, Management and the Arts, Switzerland. Benno Torgler and Bruno S. Frey are also associated with CESifo, Poschingerstrasse 5, D-81679 Munich, Germany. Please address all correspondence to Benno Torgler. We wish to thank Uwe Dulleck and Rosemary Brown for helpful comments and suggestions.
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Postal: GPO Box 2434, BRISBANE QLD 4001
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Web page: http://www.bus.qut.edu.au/faculty/schools/economics/
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Related research
Keywords: Inequity aversion; relative income; positional concerns; envy; social comparison; performance; interdependent preferences;

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Find related papers by JEL classification:
D00 - Microeconomics - - General - - - General
D60 - Microeconomics - - Welfare Economics - - - General
L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sabrina Teyssier, 2008. "Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts," Working Papers 0821, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
  2. Sabrina Teyssier, 2008. "Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts," Post-Print halshs-00303727_v1, HAL. [Downloadable!]
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