Desert and Inequity Aversion in Teams

36 Pages Posted: 16 Jul 2011 Last revised: 27 Feb 2015

See all articles by David Gill

David Gill

Purdue University, Department of Economics

Rebecca Stone

University of California, Los Angeles (UCLA) - School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2014

Abstract

Teams are becoming increasingly important in work settings. We develop a framework to study the strategic implications of a meritocratic notion of desert under which team members care about receiving what they feel they deserve. Team members find it painful to receive less than their perceived entitlement, while receiving more may induce pleasure or pain depending on whether preferences exhibit desert elation or desert guilt. Our notion of desert generalizes distributional concern models to situations in which effort choices affect the distribution perceived to be fair; in particular, desert nests inequity aversion over money net of effort costs as a special case. When identical teammates share team output equally, desert guilt generates a continuum of symmetric equilibria. Equilibrium effort can lie above or below the level in the absence of desert, so desert guilt generates behavior consistent with both positive and negative reciprocity and may underpin social norms of cooperation.

Keywords: Desert, Deservingness, Equity, Inequity aversion, Loss aversion, Reference-dependent preferences, Guilt, Reciprocity, Social norms, Team production

JEL Classification: D63, J33

Suggested Citation

Gill, David and Stone, Rebecca, Desert and Inequity Aversion in Teams (December 1, 2014). Journal of Public Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1886431 or http://dx.doi.org/10.2139/ssrn.1886431

David Gill (Contact Author)

Purdue University, Department of Economics ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

Rebecca Stone

University of California, Los Angeles (UCLA) - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States

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