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Information Transparency, Fairness and Labor Market Efficiency

  • Ebru Isgin


    (West Chester University)

  • Barry Sopher


    (Rutgers University)

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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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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  1. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching 0303002, EconWPA.
  2. W. Bentley MacLeod & James M. Malcomson, 1986. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Working Papers 585, Queen's University, Department of Economics.
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  4. Jordi Brandts & Gary Charness, 2004. "Do Labour Market Conditions Affect Gift Exchange? Some Experimental Evidence," Economic Journal, Royal Economic Society, vol. 114(497), pages 684-708, 07.
  5. Armin Falk & Ernst Fehr & Urs Fischbacher, . "Testing Theories of Fairness - Intentions Matter," IEW - Working Papers 063, Institute for Empirical Research in Economics - University of Zurich.
  6. Margin Dufwenberg & Georg Kirchsteiger, 2001. "A Theory of Sequential Reciprocity," Levine's Working Paper Archive 563824000000000090, David K. Levine.
  7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  8. 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.
  9. Hennig-Schmidt, H. & Rockenbach, B. & Sadrieh, A., 2003. "Incomplete and Asymmetric Surplus Information in Labor Relations," Discussion Paper 2003-121, Tilburg University, Center for Economic Research.
  10. repec:tpr:qjecon:v:97:y:1982:i:4:p:543-69 is not listed on IDEAS
  11. Fehr, Ernst & Schmidt, Klaus M., 2000. "Fairness, incentives, and contractual choices," Munich Reprints in Economics 20659, University of Munich, Department of Economics.
  12. Martin Brown & Armin Falk & Ernst Fehr, 2004. "Relational Contracts and the Nature of Market Interactions," Econometrica, Econometric Society, vol. 72(3), pages 747-780, 05.
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