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

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  • Benno Torgler
  • Markus Schaffner
  • Bruno S. Frey
  • Sascha L. Schmidt

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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  • Benno Torgler & Markus Schaffner & Bruno S. Frey & Sascha L. Schmidt, 2008. "Looking Awkward When Winning and Foolish When Losing: Inequity Aversion and Performance in the Field," CREMA Working Paper Series 2008-11, Center for Research in Economics, Management and the Arts (CREMA).
    • Handle: RePEc:cra:wpaper:2008-11
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    2. Sabrina Teyssier, 2008. "Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts," Working Papers 0821, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Papahristodoulou, Christos, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, University Library of Munich, Germany.

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    More about this item

    Keywords

    Inequity aversion; relative income; positional concerns; envy; social comparison; performance; interdependent preferences;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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