Social Comparison in the Workplace: Evidence from a Field Experiment

37 Pages Posted: 7 Mar 2011

See all articles by Alain Cohn

Alain Cohn

University of Michigan

Ernst Fehr

University of Zurich - Department of Economics

Benedikt Herrmann

University of Nottingham - School of Economics

Frédéric Schneider

University of Cambridge - Judge Business School

Abstract

We conducted a randomized field experiment to examine how workers respond to wage cuts, and whether their response depends on the wages paid to coworkers. Workers were assigned to teams of two, performed identical individual tasks, and received the same performance – independent hourly wage. Cutting both team members' wages caused a substantial decrease in performance. When only one team member's wage was cut, the performance decrease for the workers who received the cut was more than twice as large as the individual performance decrease when both workers' wages were cut. This finding indicates that social comparison processes among workers affect effort provision because the only difference between the two wage cut conditions is the other team member's wage level. In contrast, workers whose wage was not cut but who witnessed their team member's pay being cut displayed no change in performance relative to the baseline treatment in which both workers' wages remained unchanged, indicating that social comparison exerts asymmetric effects on effort.

Keywords: compensation, fairness, field experiment, social comparison

JEL Classification: C93, J33, M53

Suggested Citation

Cohn, Alain and Fehr, Ernst and Herrmann, Benedikt and Schneider, Frédéric, Social Comparison in the Workplace: Evidence from a Field Experiment. IZA Discussion Paper No. 5550. Available at SSRN: https://ssrn.com/abstract=1778894

Alain Cohn (Contact Author)

University of Michigan ( email )

105 S State St
Ann Arbor, MI 48109
United States

Ernst Fehr

University of Zurich - Department of Economics ( email )

Blümlisalpstrasse 10
Zuerich, 8006
Switzerland
+41 1 634 3709 (Phone)
+41 1 634 4907 (Fax)

Benedikt Herrmann

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Frédéric Schneider

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

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