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Social Comparisons in Wage Delegation: Experimental Evidence

  • Charness, Gary

    ()

    (University of California, Santa Barbara)

  • Cobo-Reyes, Ramón

    ()

    (University of Essex)

  • Lacomba, Juan A.

    ()

    (Universidad de Granada)

  • Lagos, Francisco

    ()

    (Universidad de Granada)

  • Pérez, José María

    ()

    (Universidad de Granada)

This article examines whether social comparisons have behavioral effects on workers' performance when a firm can choose workers' wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers' performance. Moreover, the relative effect of discrimination in relation to decision rights is larger than in relation to wage. We find these treatment effects with both stated effort and a real-effort task, suggesting that both approaches may yield similar results.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7802.

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Length: 45 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:iza:izadps:dp7802
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  1. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2004. "Gift Exchange in a Multi-worker Firm," Tinbergen Institute Discussion Papers 04-100/1, Tinbergen Institute.
  2. Dohmen, Thomas & Falk, Armin, 2011. "Performance Pay and Multidimensional Sorting - Productivity, Preferences and Gender," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 360, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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  12. Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-79, August.
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