Effort Transparency and Fairness
30 Pages Posted: 30 Nov 2023
Date Written: November 15, 2023
Abstract
We study how transparent information about effort impacts the allocation of earnings in a dictator game experiment. We manipulate information about the respective contributions to a joint endowment that a dictator can keep or share with a counterpart. A Humanomics framework for understanding human behavior predicts that subjects in the laboratory may give up money to follow rules of conduct that they learned in society. We observe, accordingly, that many dictators follow a meritocracy norm even if the receiver cannot observe them. However, receivers get higher payments on average when there is complete transparency about effort provision for the earned endowment. Under conditions of non-transparency, some dictators take the opportunity to give less because the receiver will not know what the fair allocation would have been. This confirms previous findings about social distance and how subjects react to the possibility of disappointing observers. Our results imply that outcomes for employees within organizations can be affected by the level of transparency for effort contribution.
Keywords: transparency, effort, fairness, information, experiment
JEL Classification: C7, C9, D8, D9
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