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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

    () (QUT)

  • Markus Schaffner

    () (QUT)

  • 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.

Suggested Citation

  • 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," School of Economics and Finance Discussion Papers and Working Papers Series 230, School of Economics and Finance, Queensland University of Technology.
  • 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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    Cited by:

    1. Brandes, Leif & Franck, Egon, 2012. "Social preferences or personal career concerns? Field evidence on positive and negative reciprocity in the workplace," Journal of Economic Psychology, Elsevier, vol. 33(5), pages 925-939.
    2. Sabrina Teyssier, 2008. "Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts," Post-Print halshs-00303727, HAL.
    3. Papahristodoulou, Christos, 2012. "A NLIP Model on Wage Dispersion and Team Performance," MPRA Paper 39149, University Library of Munich, Germany.

    More about this item

    Keywords

    Inequity aversion; relative income; positional concerns; envy; social comparison; performance; interdependent preferences;

    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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