Fairness Concerns and Job Assignment to Positions with Different Surplus

Danková, Katarína and Morita, Hodaka and Servátka, Maroš and Zhang, Le (2021): Fairness Concerns and Job Assignment to Positions with Different Surplus.

Abstract

How does job assignment to positions with different surplus affect fairness concerns? We experimentally examine agents’ fairness concerns in a three-person ultimatum game in which all agents are asked to complete a general knowledge quiz before being assigned to a high-stake or low-stake position. We disentangle two possible channels through which job assignment impacts fairness concerns, wage differences and the principal’s intentions, by comparing cases in which the job assignment is determined randomly or by the principal. The knowledge quiz, which mimics performance evaluation, signifies the distinction between the two cases as it provides a basis on which the principal can make the assignment decision. We find that the principal’s intentions significantly impact fairness concerns of the agents assigned to the low-stake position, but wage differences themselves do not. We elaborate on managerial implications of our findings.

• Item Type: MPRA Paper
• Language: English
• Keywords: job assignment, fairness concerns, experiment, ultimatum game, wage differences, intentions
• Subjects: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C91 - Laboratory, Individual Behavior; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; J - Labor and Demographic Economics > J7 - Labor Discrimination > J71 - Discrimination

References

Abeler, J., Falk, A., Goette, L. & Huffman, D. (2011) Reference Points and Effort Provision. American Economic Review, 101, 470–492.

Armantier, O. (2006). Do wealth differences affect fairness considerations? International Economic Review, 47(2), 391-429.

Babcock, L., Recalde, M. P., Vesterlund, L., & Weingart, L. (2017). Gender differences in accepting and receiving requests for tasks with low promotability. American Economic Review, 107(3), 714-747.

Bell, D. E. (1985). Disappointment in decision making under uncertainty. Operations Research, 33(1), 1-27.

Bellemare, C., Kröger, S., & Van Soest, A. (2008). Measuring inequity aversion in a heterogeneous population using experimental decisions and subjective probabilities. Econometrica, 76(4), 815-839.

Bettencourt, L. A., Brown, S. W. (1997). Contact employees: Relationships among workplace fairness, job satisfaction and prosocial service behaviors. Journal of Retailing, 73(1), 39-61.

Blount, S. (1995). When social outcomes aren′t fair: The effect of causal attributions on preferences. Organizational Behavior and Human Decision Processes, 63(2), 131-144.

Bohnet, I., & Zeckhauser, R. (2004). Social comparisons in ultimatum bargaining. Scandinavian Journal of Economics, 106(3), 495-510.

Bosman, R., Sutter, M., & van Winden, F. (2005). The impact of real effort and emotions in the power-to-take game. Journal of Economic Psychology, 26(3), 407-429.

Brandts, J., & Charness, G. (2011). The strategy versus the direct-response method: a first survey of experimental comparisons. Experimental Economics, 14(3), 375-398.

Brandts, J., Riedl, A., & Van Winden, F. (2009). Competitive rivalry, social disposition, and subjective well-being: An experiment. Journal of Public Economics, 93(11-12), 1158-1167.

Brañas-Garza, P. (2006). Poverty in dictator games: Awakening solidarity. Journal of Economic Behavior & Organization, 60(3), 306-320.

Brockner, J. (2006) Why is it so hard to be fair? Harvard Business Review, 84(3), 122-129.

Buser, T., & Dreber, A. (2016). The flipside of comparative payment schemes. Management Science, 62(9), 2626-2638.

Camerer, C. (2003). Behavioral game theory: Experiments in strategic interaction: Princeton University Press.

Cameron, L., Chaudhuri, A., Erkal, N., & Gangadharan, L. (2009). Propensities to engage in and punish corrupt behavior: Experimental evidence from Australia, India, Indonesia and Singapore. Journal of Public Economics, 93(7-8), 843-851.

Charness, G. (2004). Attribution and reciprocity in an experimental labor market. Journal of Labor Economics, 22(3), 665-688.

Charness, G., & Kuhn, P. (2007). Does pay inequality affect worker effort? Experimental evidence. Journal of Labor Economics, 25(4), 693-723.

Charness, G., & Kuhn, P. (2011). Lab labor: What can labor economists learn from the lab? In Handbook of Labor Economics (Vol. 4, pp. 229-330): Elsevier.

Cherry, T. L., Frykblom, P., & Shogren, J. F. (2002). Hardnose the dictator. American Economic Review, 92(4), 1218-1221.

Costrell, R. M., & Loury, G. C. (2004). Distribution of ability and earnings in a hierarchical job assignment model. Journal of Political Economy, 112(6), 1322-1363.

Cox, J. C. (2004). How to identify trust and reciprocity. Games and Economic Behavior, 46(2), 260-281.

Cox, J. C., & Deck, C. A. (2005). On the nature of reciprocal motives. Economic Inquiry, 43(3), 623-635.

Cox, J. C., Servátka, M., & Vadovič, R. (2017). Status quo effects in fairness games: reciprocal responses to acts of commission versus acts of omission. Experimental Economics, 20(1), 1-18.

Danková, K. (2015). Experiments on reciprocity, social comparison and overconfidence. Mimeo: University of Canterbury.

Danková, K., & Servátka, M. (2015). The house money effect and negative reciprocity. Journal of Economic Psychology, 48, 60-71.

Falk, A., Fehr, E., & Fischbacher, U. (2008). Testing theories of fairness—Intentions matter. Games and Economic Behavior, 62(1), 287-303.

Faul, F., Erdfelder, E., Lang, A.-G. & Buchner, A. (2007). G*Power 3: A flexible statistical power analysis program for the social, behavioral, and biomedical sciences. Behavior Research Methods, 39, 175-191.

Fehr, E., & Gächter, S. (2000). Fairness and retaliation: The economics of reciprocity. Journal of Economic Perspectives, 14(3), 159-181.

Fischbacher, U. (2007). z-Tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10(2), 171-178.

Gächter, S., & Thöni, C. (2010). Social comparison and performance: Experimental evidence on the fair wage–effort hypothesis. Journal of Economic Behavior & Organization, 76(3), 531-543.

Gibbons, R., & Waldman, M. (1999). A theory of wage and promotion dynamics inside firms. The Quarterly Journal of Economics, 114(4), 1321-1358.

Gibbons, R., & Waldman, M. (2004). Task-specific human capital. American Economic Review, 94(2), 203-207.

Greiner, B. (2015). Subject pool recruitment procedures: organizing experiments with ORSEE. Journal of the Economic Science Association, 1(1), 114–125..

Gneezy, U., Goette, L., Sprenger, C., & Zimmermann, F. (2017). The limits of expectations-based reference dependence. Journal of the European Economic Association, 15(4), 861-876.

Güth, W., Schmittberger, R., & Schwarze, B. (1982). An experimental analysis of ultimatum bargaining. Journal of Economic Behavior & Organization, 3(4), 367-388.

Harbring, C. (2010). On the effect of incentive schemes on trust and trustworthiness. Journal of Institutional and Theoretical Economics, 166(4), 690-714.

Ho, T.-H., & Su, X. (2009). Peer-induced fairness in games. American Economic Review, 99(5), 2022-2049.

Hoffman, E., McCabe, K., Shachat, K., & Smith, V. (1994). Preferences, property rights, and anonymity in bargaining games. Games and Economic Behavior, 7(3), 346-380.

Hoffman, E., & Spitzer, M. L. (1985). Entitlements, rights, and fairness: An experimental examination of subjects' concepts of distributive justice. Journal of Legal Studies, 14(2), 259-297.

Kagel, J. H., Kim, C., & Moser, D. (1996). Fairness in ultimatum games with asymmetric information and asymmetric payoffs. Games and Economic Behavior, 13(1), 100-110.

Kahneman, D. & Tversky, A. (1979). “Prospect Theory: An Analysis of Decision under Risk.” Econometrica, 47(2): 263–91.

Knez, M. J., & Camerer, C. F. (1995). Outside options and social comparison in three-player ultimatum game experiments. Games and Economic Behavior, 10(1), 65-94.

Konow, J. (2000). Fair shares: Accountability and cognitive dissonance in allocation decisions. American economic review, 90(4), 1072-1091.

Kőszegi, B. & Rabin, M. (2006), A Model of Reference-Dependent Preferences, Quarterly Journal of Economics, 121(4), 1133-1166.

Kőszegi, B. & Rabin, M. (2007), Reference-Dependent Risk Attitudes, American Economic Review, 97(4), 1047-1073.

Kőszegi, B. & Rabin, M. (2009) Reference-Dependent Consumption Plans, American Economic Review, 99(3), 909-936.

Lefgren, L. J., Sims, D. P., & Stoddard, O. B. (2016). Effort, luck, and voting for redistribution. Journal of Public Economics, 143, 89-97.

Loomes, G., & Sugden, R. (1986). Disappointment and dynamic consistency in choice under uncertainty. Review of Economic Studies, 53(2), 271-282.

McCabe, K. A., Rigdon, M. L., & Smith, V. L. (2003). Positive reciprocity and intentions in trust games. Journal of Economic Behavior & Organization, 52(2), 267-275.

Mezulis, A. H., Abramson, L. Y., Hyde, J. S., & Hankin, B. L. (2004). Is There a Universal Positivity Bias in Attributions? A Meta-Analytic Review of Individual, Developmental, and Cultural Differences in the Self-Serving Attributional Bias. Psychological Bulletin, 130(5), 711–747.

Offerman, T. (2002). Hurting hurts more than helping helps. European Economic Review, 46(8), 1423-1437.

Oxoby, R. J., & Spraggon, J. (2008). Mine and yours: Property rights in dictator games. Journal of Economic Behavior & Organization, 65(3-4), 703-713.

Ramalingam, Abhijit (2014). On the value of relative comparisons in firms. Economics Letters, 124(3), 446-448.

Sattinger, M. (1993). Assignment models of the distribution of earnings. Journal of Economic Literature, 31(2), 831-880.

Selten, R. (1967). Ein Marktexperiment. W: H. Sauermann (red.). Beiträge zur experimentellen Wirtschaftsforschung, 1.

Slonim, R., & Roth, A. E. (1998). Learning in high stakes ultimatum games: An experiment in the Slovak Republic. Econometrica, 569-596.

Stanca, L., Bruni, L., & Corazzini, L. (2009). Testing theories of reciprocity: Do motivations matter? Journal of Economic Behavior & Organization, 71(2), 233-245.

Woods, D., & Servátka, M. (2019). Nice to you, even nicer to me: Does self-serving generosity diminish reciprocal behavior? Experimental Economics, 22, 506-529.

Zizzo, D.J. (2010) Experimenter demand effects in economic experiments. Experimental Economics 13, 75-98.