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Title:The impact of pay comparisons on effort behavior PDF Logo
Authors:Nosenzo, Daniele
Issue Date:2010
Series/Report no.:CeDEx discussion paper series 2010-03
Abstract:This study uses a three-person gift-exchange game experiment to examine the impact of pay comparisons on effort behavior. We compare effort choices made in a treatment where workers' wages are secret with effort choices made in two 'public wages' treatments. The two 'public wages' treatments differ in whether co-workers' wages are chosen by an employer, or are fixed exogenously by the experimenter. We find that pay comparison information has an overall detrimental impact on effort choices: employees respond less favorably to the wage offers made by the employer when they receive information about the wage paid to the co-worker as compared to the case where co-workers' wages are secret. These effects are particularly pronounced in the treatment where the level of the co-worker's wage is fixed exogenously.
Subjects:social comparisons
wage comparisons
gift exchange
experiments
JEL:C91
C92
J31
Document Type:Working Paper
Appears in Collections:CeDEx Discussion Paper Series, The University of Nottingham

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