Articles

Johannes Abeler. Sebastian Kube. Matthias Wibral. Steffen Altmann. Gift Exchange And Workers’ Fairness Concerns: When Equality Is Unfair.

We study how different payment modes influence the effectiveness of gift exchange as a contract enforcement device. In particular, we analyze how horizontal fairness concerns affect performance and efficiency in an environment characterized by contractual incompleteness. In our experiment, one principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. We find that the use of equal wages elicits substantially lower efforts. This i...

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Armin Falk, Ingo Menrath, Pablo Emilio Verde, Johannes Siegrist. Cardiovascular Consequences of Unfair Pay.

This paper investigates physiological responses to perceptions of unfair pay. In a simple principal agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. In this environment unfairness can arise if an agent’s reward expectation is not met. Throughout the experiment we record agents’ heart rate variability. Our findings provide evidence of a link between perceived unfairness and heart rate variabi...

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