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| Author: | Abeler, J. (et al.) |
| Title: | Gift exchange and workers' fairness concerns: when equality is unfair |
| Journal: | Journal of the European Economic Association
2010 : VOL 8:6 p. 1299-1324 |
| Index terms: | pay equal pay performance appraisal incentives |
| Language: | eng |
| Abstract: | This article explores how different payment modes influence the effectiveness of gift exchange as a contract enforcement device. Particularly, it is analyzed how horizontal fairness concerns influence performance and efficiency in an environment characterized by contractual incompleteness. In the experiment which is presented, on principal is matched with two agents. The principal pays equal wages in one treatment and can set individual wages in the other. The finding is that the use of equal wages elicits substantially lower effort. The treatment difference instead seems to be driven by the fact that the norm of equity is violated far more frequently in the equal wage treatment. |
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