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.