Job assignment and fairness concerns

How does job assignment affect fairness concerns between coworkers? We experimentally examine agents’ horizontal fairness concerns in a three-person ultimatum game in which all agents are asked to complete a general knowledge quiz before being assigned to a high productivity or low productivity position. Job positions differ in the stakes that are available to be split between the principal and the agent. We disentangle two possible channels through which job assignment impacts fairness concerns, wage differences and the principal’s intentions, by comparing cases in which the job assignment is determined randomly or by the principal. The knowledge quiz signifies the distinction between the two cases as it provides a basis on which the principal can make the assignment decision. We find that the principal’s intentions, combined with the associated wage differences, significantly impact fairness concerns of the agents assigned to the lower productivity position, but wage differences themselves do not. We also find that better-performing agents assigned by the principal to the lower productivity position exhibit significant fairness concerns toward their peers. We discuss managerial implications of our findings.