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Procedural Unfair Wage Differentials And Their Effects On Unethical Behavior

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  • Kerstin Grosch
  • Holger A. Rau

Abstract

In this paper, we investigate how payment procedures that are deemed unfair can spur unethical behavior towards innocent coworkers in a real‐effort experiment. In our Discrimination treatment, a highly unfair payment procedure with wage differentials, half the workforce is randomly selected and paid by relative performance whereas the remaining receives no payment. A joy‐of‐destruction game measures unethical behavior subsequently. Non‐earners in Discrimination destroy significantly more than in the non‐discriminatory control treatments. In Discrimination, unethical behavior is generally high for all non‐earners, independent of individual inequality aversion and relative performance beliefs. In the control treatments, inequality aversion is the main driver of destructive behavior. (JEL C91, D03, J33, J70, M52)

Suggested Citation

  • Kerstin Grosch & Holger A. Rau, 2020. "Procedural Unfair Wage Differentials And Their Effects On Unethical Behavior," Economic Inquiry, Western Economic Association International, vol. 58(4), pages 1689-1706, October.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:4:p:1689-1706
    DOI: 10.1111/ecin.12906
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    3. Alexandros Karakostas & Nhu Tran & Daniel John Zizzo, 2022. "Experimental Insights on Anti-Social Behavior: Two Meta-Analyses," Discussion Papers Series 658, School of Economics, University of Queensland, Australia.
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    5. Columbus, Simon & Feld, Lars P. & Kasper, Matthias & Rablen, Matthew D., 2023. "Behavioural Responses to Unfair Institutions: Experimental Evidence on Rule Compliance, Norm Polarisation, and Trust," IZA Discussion Papers 16346, Institute of Labor Economics (IZA).
    6. Hajdu, Gergely & Dezső, Linda & Tobol, Yossef, 2024. "Unexpected Waiting Corrupts," Department of Economics Working Paper Series 358, WU Vienna University of Economics and Business.
    7. Grosch, Kerstin & Ibañez, Marcela & Viceisza, Angelino, 2022. "Competition and prosociality: A lab-in-the-field experiment in Ghana," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 99(C).
    8. Sanjaya, Muhammad Ryan, 2023. "Antisocial behavior in experiments: What have we learned from the past two decades?," Research in Economics, Elsevier, vol. 77(1), pages 104-115.
    9. Hansson, Kajsa & Persson, Emil & Davidai, Shai & Tinghög, Gustav, 2021. "Losing sense of fairness: How information about a level playing field reduces selfish behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 66-75.
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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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