What Is “Fair” Distribution Under Collaboration?: Evidence from Lab Experiments

Abstract

In recent decades, increasing numbers of enterprises and organizations are introducing performance-based pay systems to increase labor productivity. However, some empirical studies show that this style does not always have the intended effects and can even trigger adverse outcomes such as declining teamwork. Some studies note that failures of performance-based pay systems may be attributed to a mode of collaborative production, wherein each production process is mutually connected, and each worker’s output depends on that of others; thus, it is hard to accurately measure individual performance. By performing distribution experiments followed by production, we examined which fairness ideals or distribution principles—selfish (take-all), performance based, or egalitarian—individuals prefer to commit to in different production modes (collaborative or independent working style) and different conditions of performance information. Our experimental results showed that a significant number of subjects engaged in the collaborative working style preferred to perform egalitarian distribution and were less selfish than those engaged in the independent working style. We also observed that a significant number of participants who were informed of each team member’s performance preferred performance-based pay, whereas those without such information preferred egalitarian distribution. The results imply that in the collaborative working style, wherein individual performance information is opaque, workers tend to support egalitarian fairness ideals. This may partly explain recent failures in implementing performance-based pay systems.

This chapter is a joint work with Hiroyuki Uni.

Appendices

Appendices

3.1.1 Instructions for IW with-PI Treatment

Thank you very much for participating in this economic experiment. A leader will now explain the rules of the game. Please read the instructions below carefully to understand the rules. You can raise your hand to ask a question at any time if you find anything unclear.

• Handouts

  Please check that all handouts are on the table in front of you: an instruction page, a blank sheet of paper, and a sheet for writing a distribution proposal.

• Participation fee

  You will receive 800 points (equivalent to 800 yen) as a participation fee, simply by attending and participating in this game. This show-up fee will be paid to all participants regardless of the total points they earn in the game.

• Pairs (two-member team)

  You will be pair-matched with another participant (in a two-member team) and will play a game. A computer will randomly select an individual to become your partner. No participants, including the experimenters, will know who is paired with whom during or after the experiment.

3.1.1.1 Production (Calculation Task)

The game begins with the display of 100 questions on a screen. The question types alternate, with a two-digit question (Q1, Q3, Q5, etc.) being followed by an AQX question (Fig. 3.2).

Fig. 3.2

Calculation task

These example questions differ from those that will be displayed in the actual task.

For two-digit questions, the correct answer is the figure obtained by multiplying 8 by every two-digit number. For AQX questions, the correct answer is the figure obtained by multiplying 8 by the correct answer to a previous question (i.e., the figure given by multiplying 8 by a two-digit number). Please input the appropriate data into each answer column on the screen. You can move the cursor to the next answer column by pressing the tab key.

• Ex. Q1. 38 Correct answer: 304 (=38 × 8) Q2. AQ1 Correct answer: 2432(=304 × 8)

You will receive 4 points for correctly answering a two-digit question and 16 points for correctly answering an AQX question. You can use the blank sheet of paper on the desk for your calculations.

The time allowed is 15 min. When an experimenter indicates, “15 min have passed. Please stop work and press the OK button at the lower right of the screen,” please stop working and press the OK button on the screen. Please do not press the OK button until an experimenter gives the signal.

• Team earnings

  A team’s total earnings are given by aggregating your earnings and the earnings of your partner (the other member of your team) in the production stage.

  For example, if you give correct answers to 20 two-digit questions and 20 AQX questions and your partner gives correct answers to 10 two-digit questions and 10 AQX questions, the earnings of your team would be as follows:

  $$ 16 \times 20 + 4 \times 20 + 16 \times 10 + 4 \times 10 = 600\ \mathrm{points} $$

• Display of production results

  On completion of a production stage, your earnings, your partner’s earnings, and total team earnings (obtained by aggregating your earnings and those of your partner) are displayed on the screen.

• Distribution proposal

  After the total team earnings are displayed, please give a distribution proposal that separates the team’s earnings into your share and your partner’s share. The sum of your share and your partner’s share should equal to the total team earnings.

  For example, when total team earnings are 600 points, if your share is x and your partner’s share is y in your distribution proposal, then x + y = 600. Please fill in your distribution proposal sheet, and then enter your distribution proposal after an experimenter gives the signal.

• Final profit of a game

  A computer randomly selects one distribution proposal out of those proposed by you and your partner. Total team earnings are distributed according to the selected proposal. These distributed earnings are added to the 800 show-up fee points to obtain the final profit points of each participant.

• Point conversion and payment

  Points are converted on the basis that 1 point = 1 yen and are paid to each participant upon conclusion of the game.

If you feel anything is unclear, please raise your hand.

3.1.2 Instructions for the IW Without-PI Treatment

All contents except for item 6 (display of production results) are similar to the instructions above for the IW with-PI treatment. However, item 6 in the IW without-PI treatment differs as follows:

• Display of production results

  After completing the production stage, total team earnings, which are obtained by aggregating your earnings and those of your partner, are displayed on the screen.

3.1.3 Instructions for the CW with-PI Treatment

Contents except for item 4 (production [calculation task]) are the same as in the instructions for the IW with-PI treatment above. Item 4 in this treatment is as follows.

3.1.3.1 Production (Calculation Task)

At the beginning of a game, a chat is displayed on the left side of the screen, and 100 calculation questions are displayed on the right side of the screen (Fig. 3.3).

Fig. 3.3

Calculation task

There are two types of questions, which differ by team member. On one member’s screen, two-digit numbers are displayed for odd-numbered questions (Q1, Q3, Q5, etc.), and characters like AX (A2, A4, A6, etc.) are displayed for even-numbered questions (Q2, Q4, Q6, etc.). On the other team member’s screen, two-digit numbers are displayed for even-numbered questions (Q2, Q4, Q6, etc.), and characters like AX (A1, A3, A5, etc.) are displayed for odd-numbered questions (Q1, Q3, Q5, etc.). The correct answer for two-digit number questions is obtained by multiplying the two-digit number by 8. The correct answer for AX questions is obtained by multiplying 8 by a correct QX answer (which in turn is obtained by multiplying 8 by a two-digit number), where the correct QX answer is displayed on the screen of the other team member (see the table below). Please input the relevant data to each answer column on the screen. You can move the cursor to the next answer column by pressing the tab key.

To inform their partners of AX figures, team members can communicate via the chat feature on the left side of the screen. You can send a message by entering a sentence into the input box at the bottom of the chat box and pressing the enter key (please do not mistakenly press the OK button).

If a single sentence is longer than the window, you can view it by moving the scroll bar from left to right along the bottom of the chat box. In the case of even longer messages that stretch below the lower margin of the chat box, you can read the lower portion of the chat by manipulating the scroll wheel located in the middle of the mouse. Alternatively, you can read the entire conversation by moving the scroll bar on the right side of the chat box from top to bottom.

You can obtain 4 points for a correct answer to a two-digit question and 16 points for a correct answer to an AX question. You can use the blank sheet of paper on your desk for your calculations.

The total available calculation time is 20 min. When an experimenter indicates, “20 minutes have passed. Please stop your calculations and press the OK button in the lower right portion of the screen,” please stop your calculations, and press the OK button on the screen. Please do not press the OK button until an experimenter gives the signal.

3.1.4 Instructions for the CW Without-PI Treatment

Contents except for item 6 (display of production results) are the same as in the instructions for CW with-PI treatment above. Item 6 in this treatment is similar to item 6 in IW without-PI treatment.

• Your final profit

  The game has finished. Thank you very much for your participation in this economic experiment. We are going to hand out a questionnaire sheet and receipt. Please fill out the questionnaire sheet while we hand out your payment. You can leave the room after having received an envelope and confirmed your payment.