Exploring the Effects of Unequal and Secretive Pay

Sven Fischer () and Eva Maria Berger Steiger
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Sven Fischer: Max Planck Institute for Research on Collective Goods

No 2009-107, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We experimentally test whether intentional and observable discriminatory pay of symmetric agents in the Winter (2004) game causes low paid agents to reduce effiort. We control for intentionality of wages by either allowing a principal to determine wages or by implementing a random process. Our main observations are that discrimination has no negative effiect on effiorts and principals do not shy away from using discriminatory pay if it is observable. Rather, with experience discrimination enhances efficiency as it facilitates coordination among agents. The only evidence for reciprocity is that subjects receiving a low payment from a principal (discriminatory or not) exert signiï¬ cantly less effort.

Keywords: wage discrimination; experimental study; envy; reciprocity; pay secrecy (search for similar items in EconPapers)
JEL-codes: C72 C91 D21 J31 (search for similar items in EconPapers)
Date: 2009-12-21
New Economics Papers: this item is included in nep-cbe, nep-exp and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2009-107

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