IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Social Comparison and Performance: Experimental Evidence on the Fair Wage-Effort Hypothesis

Listed author(s):
  • Christian Thöni

    ()

  • Simon Gächter

    ()

We investigate the impact of wage comparisons for worker productivity. We present three studies which all use three-person gift-exchange experiments. Consistent with Akerlof and Yellen's (1990) fair wage-effort hypothesis we find that disadvantageous wage discrimination leads to lower efforts while advantageous wage discrimination does not increase efforts on average. Two studies allow us to measure wage comparison effects at the individual level. We observe strongly heterogeneous wage comparison effects. We also find that reactions to wage discrimination can be attributed to the underlying intentions of discrimination rather than to payoff consequences.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://ux-tauri.unisg.ch/RePEc/usg/dp2009/DP-0929-Th.pdf
Download Restriction: no

Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2009 with number 2009-29.

as
in new window

Length: 28 pages
Date of creation: Nov 2009
Handle: RePEc:usg:dp2009:2009-29
Contact details of provider: Postal:
Dufourstrasse 50, CH - 9000 St.Gallen

Phone: +41 71 224 23 25
Fax: +41 71 224 31 35
Web page: http://www.seps.unisg.ch/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window

  1. Ben Greiner & Axel Ockenfels & Peter Werner, 2010. "Wage Transparency and Performance: A Real-Effort Experiment," Working Paper Series in Economics 48, University of Cologne, Department of Economics.
  2. Sandra Maximiano & Randolph Sloof & Joep Sonnemans, 2004. "Gift Exchange in a Multi-worker Firm," Tinbergen Institute Discussion Papers 04-100/1, Tinbergen Institute.
  3. Simon Gaechter & Daniele Nosenzo & Martin Sefton, 2010. "The Impact Of Social Comparisons On Reciprocity," Discussion Papers 2010-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Urs Fischbacher & Simon Gaechter, 2009. "Social Preferences, Beliefs, and the Dynamics of Free Riding in Public Good Experiments," Discussion Papers 2009-04, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  5. Winter-Ebmer, Rudolf & Zweimüller, Josef, 1997. "Intra-firm Wage Dispersion and Firm Performance," CEPR Discussion Papers 1621, C.E.P.R. Discussion Papers.
  6. Uri Gneezy & John A List, 2006. "Putting Behavioral Economics to Work: Testing for Gift Exchange in Labor Markets Using Field Experiments," Econometrica, Econometric Society, vol. 74(5), pages 1365-1384, 09.
  7. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-280, April.
  8. Simon Gaechter & Christian Thoeni, 2009. "Social Comparison and Performance: Experimental Evidence on the Fair Wage-Effort Hypothesis," Discussion Papers 2009-23, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  9. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2008. "Testing theories of fairness--Intentions matter," Games and Economic Behavior, Elsevier, vol. 62(1), pages 287-303, January.
  10. Ernst Fehr & Armin Falk, 2003. "Wage Rigidity in a Competitive Incomplete Contract Market," Labor and Demography 0305001, EconWPA.
  11. Laurent Muller & Martin Sefton & Richard Steinberg & Lise Vesterlund, 2005. "Strategic Behavior and Learning in Repeated Voluntary-Contribution Experiments," Discussion Papers 2005-13, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  12. Georg Kirchsteiger & Ernst Fehr & Simon Gächter, 1997. "Reciprocity as a contract enforcement device: experimental evidence," ULB Institutional Repository 2013/5911, ULB -- Universite Libre de Bruxelles.
  13. Smith, Vernon L & Walker, James M, 1993. "Monetary Rewards and Decision Cost in Experimental Economics," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 245-261, April.
  14. Falk, Armin & Heckman, James J, 2010. "Lab Experiments are a Major Source of Knowledge in the Social Sciences," CEPR Discussion Papers 7620, C.E.P.R. Discussion Papers.
  15. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
  16. AndrewE. Clark & Claudia Senik, 2010. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," Economic Journal, Royal Economic Society, vol. 120(544), pages 573-594, 05.
  17. Werner Güth & Manfred Königstein & Judit Kovács & Enikõ Zala-Mezõ, 2001. "Fairness Within Firms: The Case Of One Principal And Multiple Agents," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 53(2), pages 82-101, April.
  18. Armin Falk & Ernst Fehr & Urs Fischbacher, "undated". "On the Nature of Fair Behavior," IEW - Working Papers 017, Institute for Empirical Research in Economics - University of Zurich.
  19. Gary Charness & Peter Kuhn, 2007. "Does Pay Inequality Affect Worker Effort? Experimental Evidence," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 693-723.
  20. Andrew E. Clark & David Masclet & Marie Claire Villeval, 2010. "Effort and comparison income: experimental and survey evidence," Post-Print halshs-00459777, HAL.
  21. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
  22. Martin G. Kocher & Todd L. Cherry & Stephan Kroll & Robert J. Netzer & Matthias Sutter, 2007. "Conditional cooperation on three continents," Working Papers 2007-02, Faculty of Economics and Statistics, University of Innsbruck.
  23. Margin Dufwenberg & Georg Kirchsteiger, 2001. "A Theory of Sequential Reciprocity," Levine's Working Paper Archive 563824000000000090, David K. Levine.
  24. Christian Thöni & Jean-Robert Tyran & Erik Wengström, 2009. "Microfoundations of Social Capital," Discussion Papers 09-24, University of Copenhagen. Department of Economics, revised Sep 2010.
  25. Armin Falk, 2007. "Gift Exchange in the Field," Econometrica, Econometric Society, vol. 75(5), pages 1501-1511, 09.
  26. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, vol. 54(2), pages 293-315, February.
  27. Urs Fischbacher & Simon Gaechter & Ernst Fehr, "undated". "Are People Conditionally Cooperative? Evidence from a Public Goods Experiment," IEW - Working Papers 016, Institute for Empirical Research in Economics - University of Zurich.
  28. Cohn, Alain & Fehr, Ernst & Herrmann, Benedikt & Schneider, Frédéric, 2011. "Social Comparison in the Workplace: Evidence from a Field Experiment," IZA Discussion Papers 5550, Institute for the Study of Labor (IZA).
  29. Main, Brian G M & O'Reilly, Charles A, III & Wade, James, 1993. "Top Executive Pay: Tournament or Teamwork?," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 606-628, October.
  30. R. Lynn Hannan & John H. Kagel & Donald V. Moser, 2002. "Partial Gift Exchange in an Experimental Labor Market: Impact of Subject Population Differences, Productivity Differences, and Effort Requests on Behavior," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 923-951, October.
  31. repec:sae:ilrrev:v:43:y:1990:i:3:p:13-29 is not listed on IDEAS
  32. Klaus Abbink & Heike Hennig-Schmidt, 2006. "Neutral versus loaded instructions in a bribery experiment," Experimental Economics, Springer;Economic Science Association, vol. 9(2), pages 103-121, June.
  33. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 759-789.
  34. Croson, Rachel & Gächter, Simon, 2010. "The science of experimental economics," Journal of Economic Behavior & Organization, Elsevier, vol. 73(1), pages 122-131, January.
  35. Simon Gaechter & Elke Renner, 2010. "The effects of (incentivized) belief elicitation in public goods experiments," Discussion Papers 2010-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  36. Burchett, Richard & Willoughby, John, 2004. "Work productivity when knowledge of different reward systems varies: Report from an economic experiment," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 591-600, October.
  37. Martins, Pedro S., 2008. "Dispersion in wage premiums and firm performance," Economics Letters, Elsevier, vol. 101(1), pages 63-65, October.
  38. Christian Grund & Niels Westergaard-Nielsen, 2005. "The Dispersion of Employees' Wage Increases and Firm Performance," Bonn Econ Discussion Papers bgse3_2005, University of Bonn, Germany.
  39. Jonathan S. Leonard, 1990. "Executive Pay and Firm Performance," ILR Review, Cornell University, ILR School, vol. 43(3), pages 13, April.
  40. Heike Hennig-Schmidt & Bettina Rockenbach & Abdolkarim Sadrieh, 2005. "In search of worker's real effort reciprocity - a field and a laboratory experiment," Artefactual Field Experiments 00065, The Field Experiments Website.
  41. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  42. Ernst Fehr & Lorenz Goette & Christian Zehnder, 2008. "A behavioral account of the labor market: the role of fairness concerns," IEW - Working Papers 394, Institute for Empirical Research in Economics - University of Zurich.
  43. Antonio Cabrales & Gary Charness, 2000. "Optimal contracts, adverse selection and social preferences: An experiment," Economics Working Papers 478, Department of Economics and Business, Universitat Pompeu Fabra.
  44. Ernst Fehr & Urs Fischbacher, 2002. "Why Social Preferences Matter -- The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives," Economic Journal, Royal Economic Society, vol. 112(478), pages 1-33, March.
  45. Dufwenberg, Martin & Kirchsteiger, Georg, 2000. "Reciprocity and wage undercutting," European Economic Review, Elsevier, vol. 44(4-6), pages 1069-1078, May.
  46. Luigi Mittone & Matteo Ploner, 2008. "Social Effects in a Multi-Agent Investment Game. An Experimental Analysis," CEEL Working Papers 0805, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
  47. Hibbs Jr., Douglas A. & Locking, Håkan, 2000. "Wage Dispersion and Productive Efficiency: Evidence For Sweden," Working Papers in Economics 21, University of Gothenburg, Department of Economics.
  48. 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.
  49. Falk, Armin & Knell, Markus, 2004. "Choosing the Joneses: Endogenous Goals and Reference Standards," IZA Discussion Papers 1152, Institute for the Study of Labor (IZA).
  50. Iris Bohnet & Richard Zeckhauser, 2004. "Social comparisons in ultimatum bargaining," CREMA Working Paper Series 2004-08, Center for Research in Economics, Management and the Arts (CREMA).
  51. Charness, Gary B, 2004. "Attribution And Reciprocity In An Experimental Labor Market," University of California at Santa Barbara, Economics Working Paper Series qt8rp6b18c, Department of Economics, UC Santa Barbara.
  52. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
  53. Fliessbach, Klaus & Weber, Bernd & Trautner, P. & Dohmen, Thomas J. & Sunde, Uwe & Elger, C. E. & Falk, Armin, 2007. "Social comparison affects reward-related brain activity in the human ventral striatum," Munich Reprints in Economics 20362, University of Munich, Department of Economics.
  54. Benedikt Herrmann & Christian Thöni, 2009. "Measuring conditional cooperation: a replication study in Russia," Experimental Economics, Springer;Economic Science Association, vol. 12(1), pages 87-92, March.
  55. Agell, Jonas & Bennmarker, Helge, 2007. "Wage incentives and wage rigidity: A representative view from within," Labour Economics, Elsevier, vol. 14(3), pages 347-369, June.
  56. Gary Charness & Guillaume R. Frechette & John H. Kagel, 2004. "How Robust is Laboratory Gift Exchange?," Experimental Economics, Springer;Economic Science Association, vol. 7(2), pages 189-205, 06.
  57. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
  58. James Konow, 2000. "Fair Shares: Accountability and Cognitive Dissonance in Allocation Decisions," American Economic Review, American Economic Association, vol. 90(4), pages 1072-1091, September.
  59. Alewell, Dorothea & Nicklisch, Andreas, 2009. "Wage differentials and social comparison: An experimental study of interrelated ultimatum bargaining," International Review of Law and Economics, Elsevier, vol. 29(3), pages 210-220, September.
  60. Fehr, Ernst, et al, 1998. "When Social Norms Overpower Competition: Gift Exchange in Experimental Labor Markets," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 324-351, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:usg:dp2009:2009-29. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martina Flockerzi)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.