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Fairness norms, sanctioning power and social control at bonus payments in companies. A multi-level factorial survey study

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Abstract

Experimental results on allocation situations show that giving behavior is strongly determined by sociological factors and driven by both egoistic and social motivations. With a factorial survey design we investigate how employers in small and medium sized companies in Germany decide how they would allocate 10.000 Euro between themselves and fictitious employees that vary regarding some characteristics. We focus on the relative strength of fairness norms and sanctioning power of the employees on the bonus payment as well as how both is being influenced by different informational conditions. For this, subjects are randomized into one of three decision environments that differ in their degree of transparency of the allocation. Knowing that there is a possibility for a bonus and knowing how it is allocated among the employees switches further motives for a bonus payment on and at the same time strengthens viz. weakens, though differently, both sanctioning considerations and the pursue of fairness norms. Although the fairness norm of proportionality dominates in each of the environments its degree strongly varies between non-transparency and transparency, indicating the divergence between subjective fairness ideals and social desirability. The impact of sanctioning power of the employees becomes absent through complete transparency. Altogether we show that social control not only influences the amount of bonus paid, but also the criteria of how to allocate.

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