Peer Pressure in Work Teams : The effects of Inequity Aversion

Many empirical studies have shed light on the efficiency of peer pressure. I propose here to model peer pressure by incorporating in the utility function self centered inequity aversion. I find that opportunity for sufficiently inequity averse players to punish their peers, is effective in inducing others to cooperate. At the equilibrium, all players cooperate and punish any shirker since punishing is a way to reduce inequity. Contrary, nobody cooperates without peer pressure even if players are inequity averse.cooperation; fairness; inequity aversion; peer pressure; work teams

Is the ebay feedback system really efficient ? an experimental study

The eBay Feedback Forum is claimed to be a crucial component of the success of eBay. Many empirical studies have found that this feedback system exerts a deterrent effect on the opportunistic behavior the Internet's anonymity may incite buyers and sellers to adopt. The feedback system in place on eBay is however far from being perfect and may be especially vulnerable to strategic ratings (or nonratings) that might reduce the informational content of feedback profiles. This article aims to examine the efficiency of the eBay feedback system, through a set of experiments based on the trust game. Our experimental design consists of four different treatments. The baseline treatment corresponds to a finite repeated simultaneous trust game. The second treatment, called “eBay rating” is identical to the baseline treatment except that we added a second stage in which the players have the opportunity of rating their partner. In this treatment, each participant is given the choice to either evaluate immediately or wait, knowing that only one rating will be accepted. The third treatment, called "Sequential rating" is identical to the “eBay rating” treatment, except that the order in which players evaluate one another is randomly determined by the computer. Finally in the fourth treatment, called “Simultaneous rating”, both players are required to make their rating decisions simultaneously. Our experimental results indicate that the eBay feedback system could be improved by either constraining partners to leave ratings simultaneously or by predetermining the rating sequence.

Peer Pressure in Work Teams : The effects of Inequity Aversion

Working Paper du GATE 2002-15Many empirical studies have shed light on the efficiency of peer pressure. I propose here to model peer pressure by incorporating in the utility function self centered inequity aversion. I find that opportunity for sufficiently inequity averse players to punish their peers, is effective in inducing others to cooperate. At the equilibrium, all players cooperate and punish any shirker since punishing is a way to reduce inequity. Contrary, nobody cooperates without peer pressure even if players are inequity averse.Plusieurs études empiriques ont mis en évidence l'efficacité des mécanismes de pression des pairs. Je propose ici de modéliser la pression des pairs en incorporant l'aversion à l'inégalité dans la fonction d'utilité des agents. Je montre que lorsque les agents sont suffisamment averses à l'inégalité, ils sont incités à sanctionner leurs pairs et cela accroît la coopération au sein de l'équipe. A l'équilibre, tous les agents coopèrent et punissent tout comportement déviant puisque sanctionner un passager clandestin permet de réduire l'inégalité des gains. A l'inverse, lorsque les agents n'ont pas la possibilité de sanctionner leurs pairs, les agents ne peuvent pas soutenir la coopération mêmes s'ils sont averses à l'inégalité

Punishment, Inequality and Emotions

Cooperation among people who are not related to each other is sustained by the availability of punishment devices which help enforce social norms (Fehr and Gächter, 2002). However, the rationale for costly punishment remains unclear. This paper reports the results of an experiment investigating inequality aversion and negative emotions as possible determinants of punishment. We compare two treatments of a public good game, one in which costly punishment reduces the immediate payoff inequality between the punisher and the target, and one in which it does not affect inequality. We show that while inequality-aversion prevents some subjects from punishing in the equal cost treatment, negative emotions are the primary motive for punishment. Results also indicate that the intensity of punishment increases with the level of inequality, and reduces earnings inequality over time.cooperation ; experiment ; Free-Riding ; inequity aversion ; negative emotions

Punishment, Inequality and Emotions

Cooperation among people who are not related to each other is sustained by the availability of punishment devices which help enforce social norms (Fehr and Gächter, 2002). However, the rationale for costly punishment remains unclear. This paper reports the results of an experiment investigating inequality aversion and negative emotions as possible determinants of punishment. We compare two treatments of a public good game, one in which costly punishment reduces the immediate payoff inequality between the punisher and the target, and one in which it does not affect inequality. We show that while inequality-aversion prevents some subjects from punishing in the equal cost treatment, negative emotions are the primary motive for punishment. Results also indicate that the intensity of punishment increases with the level of inequality, and reduces earnings inequality over time.inequality aversion; negative emotions; free-riding; cooperation; experiment

Does Contributing Sequentially Increase the Level of Cooperation in Public Goods Games ? An Experimental Investigation

We run a series of experiments in which subjects have to choose their level of contribution to a pure public good. Our design differs from the standard public good game with respect to the decision procedure. Instead of deciding simultaneously in each round, subjects are randomly ordered in a sequence which differs from round to round. We compare sessions in which subjects can observe the exact contributions from earlier decisions ("Sequential treatment with Information") to sessions in which subjects decide sequentially but cannot observe earlier contributions ("Sequential treatment without information"). Furthermore, we investigate the effect of group size on aggregate contributions. Our result indicate that contributing sequentially increases the level of contribution to the public good when subjects are informed about the contribution levels of lower ranked subjects. Moreover, we observe that earlier players in the sequence try to influence positively the contributions of subsequent decision makers in the sequence, by making a large contribution. Such behaviour is motivated by the belief that subsequent players will reciprocate by also making a large contribution.

Never the Same After the First Time: The Satisfaction of the Second-Generation Self-Employed

Previous empirical work has shown that the self-employed are generally more satisfied than salaried workers. This paper contributes to the existing literature in two ways. First, using French data from the ECHP and British data from the BHPS, we investigate the domains over which this differential operates. We show that, after controlling for occupation, self-employed workers are generally more satisfied with working conditions and pay, but less satisfied than employees with respect to job security. We then consider the differences between the first- and second-generation self-employed. The first-generation self-employed (those whose parents were not self-employed) are more satisfied overall than are the second-generation self-employed. We argue that this finding is consistent with the self-employed partly comparing their labor market outcomes with those of their parents, as well as parental transfers which loosen the self-employment participation constraint. This result is found in both pooled and panel analysis.self-employment, satisfaction, intergenerational comparisons, parents

Competitive Preferences and Status as an Incentive: Experimental Evidence

In this paper, we investigate individuals' investment in status in an environment where no monetary return can possibly be derived from reaching a better relative position. We use a real-effort experiment in which we permit individuals to learn and potentially improve their status (rank). We find that people express both intrinsic motivation and a taste for status. Indeed, people increase their effort when they are simply informed about their relative performance, and people pay both to sabotage others’ output and to artificially increase their own relative performance. In addition, stronger group identity favors positive rivalry and discourages sabotage among peers.status seeking, rank, competitive preferences, experiment

Effort and comparison income: experimental and survey evidence

The authors test the hypothesis that individual effort on the job depends both on one's own income and on the individual's position in the relevant income distribution. Combining experimental evidence from a gift-exchange game with multi-country ISSP survey data, they analyze the extent to which relative income affects an individual's effort, finding that an individual's rank in the income distribution more strongly determines effort than does others' average income, which suggests that comparisons are more ordinal than cardinal. Their experiment also reveals that comparisons over time affect effort: individuals who received higher income offers or enjoyed higher income rank in the past exerted lower levels of effort for a given current income and rank.Experimental economics ; personnel economics ; comparison income

Never the same after the first time: The satisfaction of the second-generation self-employed

Previous empirical work has shown that the self-employed are generally more satisfied than salaried workers. This paper contributes to the existing literature in two ways. First, using French data from the ECHP and British data from the BHPS, we investigate the domains over which this differential operates. We show that, after controlling for occupation, self-employed workers are generally more satisfied with working conditions and pay, but less satisfied than employees with respect to job security. We then consider the differences between the first- and second-generation self-employed. The first-generation self-employed (those whose parents were not self-employed) are more satisfied overall than are the second-generation self-employed. We argue that this finding is consistent with the self-employed partly comparing their labor market outcomes with those of their parents, as well as parental transfers which loosen the self-employment participation constraint. This result is found in both pooled and panel analysis.satisfaction ; self-employment ; parents ; intergenerational comparisons