Do High Stakes and Competition Undermine Fairness? Evidence from Russia

Ernst Fehr, Urs Fischbacher and Elena Tougareva

No 120, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: This paper reports the results of a series of competitive labour market experiments in which subjects have the possibility to reciprocate favours. In the high stake condition subjects earned between two and three times their monthly income during the experiment. In the normal stake condition the stake level was reduced by a factor of ten. We observe that both in the high and the normal stake condition fairness concerns are strong enough to outweigh competitive forces and give rise to non-competitive wages. There is also no evidence that effort behaviour becomes generally more selfish at higher stake levels. Therefore, our results suggest that, contrary to common beliefs, fairness concerns may play an important role even at relatively high stake levels.

Keywords: Reciprocity; Fairness; Competitive Markets; Incentives; Stake Size (search for similar items in EconPapers)
JEL-codes: C92 J30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (57)

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