Experimental Economics and Game Theory Seminar for February 21

Events, Seminars | February 17, 2020

Join us for the ICES Seminar in Experimental Economics and Game Theory of the Spring 2020 semester, featuring James Konow.

Dr. Konow, of Loyola Marymount University, will discuss his paper The Just World Hypothesis: Theory and a Field Experiment (Abstract). The talk will take place on Friday, February 21st, from 4:00 to 5:00pm in room 5183 of Vernon Smith Hall, Arlington campus.
Visit the Seminar schedule to access the paper and to learn more about upcoming speakers.

Abstract

Two rules have figured prominently in both the descriptive and prescriptive literatures on distributive justice, viz., equality and equity. The former refers to equal shares, whereas the latter refers to allocations that are in proportion to some variable, such as hours worked or effort. We consider the possibility that worker experience with equal or equitable compensation schemes affects their beliefs about which rule applies. We formulate a simple model of fairness preferences that incorporates the claim of the Just World Hypothesis that people are motivated to rationalize their actual rewards, that is, to adjust their beliefs about what is fair in the direction of their actual allocations. A theory is formulated in conjunction with a natural field experiment in which Ethiopian workers complete a piecemeal task over a two week period. The theory predicts that high and low productivity workers, whose beliefs are affected by their actual pay, will respond in their work effort to changes in compensation schemes depending on whether they have initially been paid equally or equitably. The results of the experiment on worker effort are consistent with the direction of changes predicted by the theory.

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