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Information Transparency, Fairness and Labor Market Efficiency

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Author Info

  • Ebru Isgin

    ()
    (West Chester University)

  • Barry Sopher

    ()
    (Rutgers University)

Abstract

The paper studies the role of information transparency on fairness concerns,welfare and efficiency. When the firm's productivity and ultimately profits are revealed, wage offers induce relatively fair divisions of potential gains and workers respond with higher performance. Workers respond not only to wages but also to firms' intentions concerning fairness. Information transparency serves as a mechanism that promotes fairness and performance while the lack of transparency results in reduced earnings for workers and market inefficiency.

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Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 201303.

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Length: 20 pages
Date of creation: 18 Jan 2013
Date of revision:
Handle: RePEc:rut:rutres:201303

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Related research

Keywords: Experiments; Incomplete Contracts; Fairness; Information Transparency;

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References

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  1. Heike Hennig-Schmidt & Bettina Rockenbach & Abdolkarim Sadrieh, 2003. "Incomplete and Asymmetric Surplus Information in Labor Relations," Bonn Econ Discussion Papers bgse24_2003, University of Bonn, Germany.
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  5. Dufwenberg, M. & Kirchsteiger, G., 1998. "A Theory of Sequential Reciprocity," Discussion Paper 1998-37, Tilburg University, Center for Economic Research.
  6. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2008. "Testing theories of fairness--Intentions matter," Games and Economic Behavior, Elsevier, vol. 62(1), pages 287-303, January.
  7. Fehr, Ernst & Schmidt, Klaus M., 2000. "Fairness, incentives, and contractual choices," Munich Reprints in Economics 20659, University of Munich, Department of Economics.
  8. W. Bentley MacLeod & James M. Malcomson, 1986. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Working Papers 585, Queen's University, Department of Economics.
  9. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
  10. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  11. Georg Kirchsteiger & Ernst Fehr & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," ULB Institutional Repository 2013/5927, ULB -- Universite Libre de Bruxelles.
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