Subprojects

"Wage negotiations and strategic responses to transparency"

This paper experimentally investigates how exogenous and endogenous wage transparency affect the interactions between employers and employees in a labor environment characterized by gift exchange. After the first part of the experiment in which wage offers always remain private information, three treatments in the second part either make wages fully transparent or leave the choice to establish (costly) wage transparency either to employees or employers. When full transparency is induced exogenously, the share of equal wage offers increases in the second part. At the same time, employers and employees rarely induce wage transparency themselves. Moreover, in the treatment where employees could enforce transparency, average wage offers and performance are significantly lower than in the other treatments. Results from a control treatment indicate that employees’ requests for wage information are cost-sensitive. If information about co-employees’ wage offers is costless, employees almost always ask for this information, thus achieving nearly full wage transparency. Further analyses reveal that wage offers in the second part seem to be higher under transparency than under non-transparency of wage offers.

Journal of Economic Behavior & Organization, 2023, 209, 161-175. [Link] 

"On common evaluation standards and the acceptance of wage inequality"

This study investigates how the exogenous provision of norm information concerning wage inequality influences the acceptance of wage differences. In an experiment where one employer interacts with two employees who differ in productivities, two main treatments provide information suggesting either an injunctive norm for small or for large wage differences prior to the interaction.

Norm-relevant information significantly shifts individual beliefs concerning the appropriateness of wage inequality: Subjects who receive information hinting at a norm for high (low) wage inequality are more (less) likely to consider larger wage differences to be appropriate. Yet, when a norm for low wage inequality is suggested, a non-negligible share of employers still differentiates strongly, making it difficult to coordinate on a commonly accepted norm for wage inequality. Moreover, norm information signaling high wage inequality positively affects the output of low-performing employees.

Games and Economic Behavior, 2024, 145, 137-156. [Link]