Why do workers work? Inequality and collective benefits in organisational production experiments

Abstract

Laboratory experiments in a simulated firm comprising an investor and two workers were performed to examine how different incentives of self-interest, wage inequality, employer–employee inequality, or collective benefits affect worker performance in an organisational production. The findings indicate that workers given their own wage information only lose their incentives to make efforts as game goes on for their selfish incentives. Workers with information pertaining to unequal wages performed significantly lower than equally waged workers due to impaired cooperation. Equally paid workers showed higher levels of cooperation with their paired workers in their production as well as ‘boycotting’ behaviour due to enhanced aversion to employer–employee inequality. However, workers who are given collective information on total wages and firm revenues rendered the highest effort levels in response to enhanced incentives to achieve collective benefits for an organisation, regardless of lower wage and employer–employee inequalities. The experimental results indicated that workers are not only motivated by selfishness or fair treatment, but also aim to contribute to an organisation, of which they are a part of.