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Do High Stakes and Competition Undermine Fairness? Evidence from Russia

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Listed:
  • Ernst Fehr
  • Urs Fischbacher
  • Elena Tougareva

Abstract

This paper reports the results of a series of competitive labour market experiments in which subjects have the possibility to reciprocate favours. In the high stake condition subjects earned between two and three times their monthly income during the experiment. In the normal stake condition the stake level was reduced by a factor of ten. We observe that both in the high and the normal stake condition fairness concerns are strong enough to outweigh competitive forces and give rise to non-competitive wages. There is also no evidence that effort behaviour becomes generally more selfish at higher stake levels. Therefore, our results suggest that, contrary to common beliefs, fairness concerns may play an important role even at relatively high stake levels.

Suggested Citation

  • Ernst Fehr & Urs Fischbacher & Elena Tougareva, "undated". "Do High Stakes and Competition Undermine Fairness? Evidence from Russia," IEW - Working Papers 120, Institute for Empirical Research in Economics - University of Zurich.
    • Handle: RePEc:zur:iewwpx:120
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    References listed on IDEAS

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    More about this item

    Keywords

    Reciprocity; Fairness; Competitive Markets; Incentives; Stake Size;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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