Looking Awkward when Winning and Foolish when Losing: Inequity Aversion and Performance in the Field

IEW Working Paper No. 369

34 Pages Posted: 5 May 2008  

Benno Torgler

Yale University - Yale Center for International and Area Studies

Markus Schaffner

Queensland University of Technology

Bruno S. Frey

CREMA; University of Basel

Sascha L. Schmidt

EBS Universität für Wirtschaft und Recht - Institute for Sports, Business & Society

Date Written: April 2008

Abstract

The experimental literature and studies using survey data have established that people care a great deal about their relative economic position and not solely, as standard economic theory assumes, about their absolute economic position. Individuals are concerned about social comparisons. However, behavioral evidence in the field is rare. This paper provides an empirical analysis testing the model of inequity aversion using two unique panel data sets for basketball and soccer players. We find support that the concept of inequity aversion helps to understand how the relative income situation affects performance in a real competitive environment with real tasks and real incentives.

Keywords: inequity aversion, relative income, positional concerns, envy, social comparison, performance, interdependent preferences

JEL Classification: D000, D600, 8222, 9210, L830

Suggested Citation

Torgler, Benno and Schaffner, Markus and Frey, Bruno S. and Schmidt, Sascha L., Looking Awkward when Winning and Foolish when Losing: Inequity Aversion and Performance in the Field (April 2008). Available at SSRN: https://ssrn.com/abstract=1128066 or http://dx.doi.org/10.2139/ssrn.1128066

Benno Torgler (Contact Author)

Yale University - Yale Center for International and Area Studies ( email )

P.O. Box 208206
New Haven, CT 06520-8206
United States

HOME PAGE: http://www.crema-research.ch/fellowseiten/torgler.htm

Markus Schaffner

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
Switzerland
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002
Switzerland

Sascha L. Schmidt

EBS Universität für Wirtschaft und Recht - Institute for Sports, Business & Society ( email )

Gustav-Stresemann-Ring 3
65189 Wiesbaden, Hessen 65189
Germany
0611 7102 2064 (Phone)

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