Favouritism Or Fairness?: A Framed Laboratory Experiment

Dey, Oindrila and Das, Abhishek and Gupta, Gautam and Banerjee, Swapnendu (2017): Favouritism Or Fairness?: A Framed Laboratory Experiment.

Abstract

This paper provides laboratory experimental evidence for prevalence of organizational favouritism. It is significantly found that when subjects where put into a situation where they can offer a job to someone then the choice criteria is based on social ties rather than efficiency. Interestingly, even when subjects had the choice of giving the job to her favourite person, she prefers to give it randomly to anyone from her favoured pool, when her group size is large. Also, socio-economic factors like family structure, family occupation, social connection, caste and political connections are among the important factors in explaining the emergence of favouritism.

• Item Type: MPRA Paper
• Language: English
• Keywords: Favouritism, group size, status, efficiency, lab experiment
• 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; D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles; J - Labor and Demographic Economics > J7 - Labor Discrimination; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M5 - Personnel Economics > M51 - Firm Employment Decisions ; Promotions

References

Albright, M. and C. Carr (1997). 101 Biggest Mistakes Managers Make: And how to Avoid Them, Prentice Hall, Inc.

Bandiera, O., I. Barankay and I. Rasul (2009). Social connections and incentives in the workplace: Evidence from personnel data. Econometrica, Vol .77, No.4, pp 1047-1094.

Barr, A., and A. Oduro (2002). Ethnic fractionalization in an African labour market. Journal of Development Economics, Vol.68, No.2, pp 355-379.

Belot, M., van de Ven, J. (2011). Friendships and favouritism on the school ground—A framed field experiment. The Economic Journal, Vol.212, pp 1251–1288.

Bennedsen, M., F. Perez-Gonzalez, F., and D.Wolfenzon (2006). Do CEOs Matter? NYU Working Paper No. FIN-06-032.

Bertrand, M., F. Kramarz,, A. Schoar, and D. Thesmar (2008). Political connections and corporate performance: An analysis on French CEOs. Working paper, HEC Paris.

Bramoullé, Y. and Goyal,S. (2009). Favoritism, CIRPEE Working Paper 09-41.

Brañas-Garza, P. (2006). Poverty in dictator games: Awakening solidarity. Journal of Economic Behavior and Organization, Vol. 60, No.3,pp 306-320.

Breuer, K., P. Nieken, D. Sliwka (2011). Social Ties and Subjective Performance Evaluations: An Empirical Investigation, Review of Managerial Science, DOI 10.1007/s11846-011-0076-3.

Calvó‐Armengol, A., and M.O. Jackson (2010). Peer pressure. Journal of the European Economic Association, Vol.8, No. 1, pp 62-89.

Charumilind, C., Kali, R., and Y. Wiwattanakantang (2006). Connected lending: Thailand before the financial crisis. The Journal of Business, Vol.79, No.1,pp 181-218.

Chen, Z. (2010). Office Politics in Tournaments: Strategic Use of Favoritism to Fight Collusion, Working paper, University of Auckland.

Collier, P., and P.C. Vicente (2012). Violence, bribery, and fraud: the political economy of elections in Sub-Saharan Africa. Public Choice, Vol.153, No.(1-2), pp117-147.

Comerford, H (2002). Findings Report Respectful Workplace Project, Government of New-foundland and Labrador, mimeo.

De Sardan, J. O. (1999). A moral economy of corruption in Africa?. The Journal of Modern African Studies, Vol.37, No.0),pp 25-52.

Fisman, R. J. (2003). Ethnic ties and the provision of credit: Relationship-level evidence from African firms. Advances in Economic Analysis and Policy,Vol.3, No.1.

Goeree, J. K., M.A. McConnell, T. Mitchell, T. Tromp and L. Yariv (2010). The 1/d law of giving. American Economic Journal: Microeconomics, Vol.2, No.1, pp183-203.

Hoff, K. and P. Pandey (2004).Belief systems and durable inequalities: an experimental investigation of Indian caste, Policy Research Working Paper Series 3351, The World Bank.

Kandel, E., and E.P. Lazear(1992). Peer pressure and partnerships. Journal of political Economy, pp 801-817.

Kaufmann, V., M.M. Bergman, M. M. and D. Joy (2004). Motility: mobility as capital. International journal of urban and regional research, Vol.28, No.4, pp 745-756.

Khatri, N., E. W. Tsang, E. W. andT.M. Begley (2006). Cronyism: A cross-cultural analysis. Journal of International Business Studies, Vol.37, No.1, pp.61-75.

Kramarz, F., and D. Thesmar(2008). Beyond independence: Social networks in the boardroom. Working Paper, HEC Paris.

Kramarz, F., and O.N. Skans (2007). With a little help from my... parents? Family networks and youth labor market entry. CREST, mimeo.

Kwon,I.(2006). Endogenous Favoritism in Organizations, Topics in Theoretical Economics,Vol.6, No.1, pp 01-24.

Lentz, B. F., and D.N. Laband, D. N. (1989). Why so many children of doctors become doctors: Nepotism vs. human capital transfers. Journal of Human Resources, pp396-413.

Möbius, M., T. Phan and A. Szeidl (2015). Treasure hunt. NBER Working Paper No. 21014

Pérez-González, F. (2006). Inherited control and firm performance. The American Economic Review, Vol. 9, No.5, pp1559-1588.

Pinel, E.C.(1999). Stigma Consciousness: The Psychological Legacy of Social Stereotypes, American Psychological Association, Vol. 76, No. 1, pp 114-128.

Pope, J. (2000). Confronting corruption: The elements of a national integrity system. Transparency International.

Prendergast, C. and R. Topel (1996). Favoritism in Organizations, Journal of Political Economy, Vol. 104, pp 958-978.

Tajfel, H., M. G. Billig, R. P. Bundy and C. Flament, (1971). Social Categorization and Intergroup Behavior, European Journal of Social Psychology, Vol.1, pp. 149–178.

Tanzi, V. (1995). Corruption: arm’s-length relationships and markets. The Economics of Organized Crime, pp 161-82.

Turner, J.C., R.J. Brown and H. Tajfel (1979). Social Comparison and Group Interest in Ingroup Favouritism, European Journal of Social Psychology, Vol. 9, No. 2, pp. 187-204.

Wilcoxon, F. (1945). Individual comparisons by ranking methods. Biometrics Bulletin. Vol. 1, No.6, pp. 80–83.