Social Comparisons in Wage Delegation: Experimental Evidence

We make two contributions in this article. First, we examine whether social comparisons have behavioral effects on workers’ performance when a firm can choose workers’ wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers’ performance. In fact, the relative effect of discrimination in relation to decision rights is larger than in relation to wage. Our second contribution is methodological. We find that our treatment effects are present with both stated effort and a real-effort task, suggesting that both approaches may yield similar results in labor experiments. *Financial support from the Spanish Ministry of Education and Science (SEJ2010-17049/ECON; SEJ2009-11117/ECON), the Division of Social Sciences and the Department of Economics at UCSB, and Junta de Andalucía (P07-SEJ-02547; P07-SEJ-3261) is gratefully acknowledged.