Medium of exchange matters: what's fair for goods is unfair for money

Cognitive labor shapes the desire for social and monetary compensation

When do people want something back for their mental labor? Based on equity theory, we propose that conscious experiences of success and effort—which emerge during cognitive work—shape people’s subsequent desire for social and monetary rewards. We examined this idea in a series of experiments, in which participants carried out a cognitive task, in which we manipulated task difficulty (easy vs. difficult) and performance feedback (high vs. low) within subjects. After each trial of this task, we probed people’s desire for compensation, in terms of social appreciation or money. Findings were in line with the entitlement hypothesis, which assumes that the experience of success can cause people to feel entitled to money. However, we found only indirect support for the effort compensation hypothesis, which assumes that the feeling of effort increases the subsequent desire for compensation, and no support for the intrinsic reward hypothesis, which assumes that people desire less social appreciation after already having experienced success. When considered together, our results suggest that labor-related feelings (of success and effort) shape people’s subsequent desire for money and social appreciation in several ways. These findings have potential implications for the effective use of performance feedback in work contexts.

Inconsistent allocations of harms versus benefits may exacerbate environmental inequality

Local environmental conditions, such as air and water quality, are shaped, in part, by how societies allocate environmental harms and benefits. Since environmental conditions have long-lasting impacts on people’s lives, understanding the psychology behind such allocation decisions is critical. Across studies, we demonstrate that people are less likely to support decisions that increase environmental equality when considering the allocation of environmental harms (vs. benefits). Our findings suggest that careful attention to the way that the allocation of environmental harms is presented to the public could change the support for decisions that address environmental inequality.

We report five studies that examine preferences for the allocation of environmental harms and benefits. In all studies, participants were presented with scenarios in which an existing environmental inequality between two otherwise similar communities could either be decreased or increased through various allocation decisions. Our results demonstrate that despite well-established preferences toward equal outcomes, people express weaker preferences for options that increase equality when considering the allocation of environmental harms (e.g., building new polluting facilities) than when considering the allocation of environmental benefits (e.g., applying pollution-reducing technologies). We argue that this effect emerges from fairness considerations rooted in a psychological incompatibility between the allocation of harms, which is seen as an inherently unfair action, and equality, which is a basic fairness principle. Since the allocation of harms is an inevitable part of operations of both governments and businesses, our results suggest that where possible, parties interested in increasing environmental equality may benefit from framing such proposals as bestowing relative benefits instead of imposing relative harms.

Money: An Integrated Review and Synthesis From a Psychological Perspective

Many empirical studies have demonstrated the psychological effects of various aspects of money, including the aspiration for money, mere thoughts about money, possession of money, and placement of people in economic contexts. Although multiple aspects of money and varied methodologies have been focused on and implemented, the underlying mechanisms of the empirical findings from these seemingly isolated areas significantly overlap. In this article, we operationalize money as a broad concept and take a novel approach by providing an integrated review of the literature and identifying five major streams of mechanisms: (a) self-focused behavior; (b) inhibited other-oriented behavior; (c) favoring of a self–other distinction; (d) money’s relationship with self-esteem and self-efficacy; and (e) goal pursuit, objectification, outcome maximization, and unethicality. Moreover, we propose a unified psychological perspective for the future—money as an embodiment of social distinction—which could potentially account for past findings and generate future work.

Research on supply chain performance based on retailers' fairness concerns: Wholesale prices versus cost sharing of efforts

With the deepening of the research on supply chain management, scholars have increasingly begun to investigate the impact of fairness on a supply chain, and many conclusions suggest that a simple wholesale price can coordinate a supply chain under specific conditions. However, the corresponding analysis and other optimization mechanisms that affect the situation in which the channel cannot be coordinated are either omitted or given little attention. In this paper, we constructed a dyadic supply chain with a single manufacturer and a single retailer; the manufacturer acts as a selfish leader, and the retailer acts as a follower with fairness concerns and sales efforts. For this setting, we derived the equilibrium strategy solution for a wholesale price contract and cost sharing of effort (CS-E) contract offered by the manufacturer, and the results indicated that both contracts achieved channel coordination with different requirements. Further, the profit of the manufacturer and the sales effort of the retailer under CS-E contracts were never less than those for the wholesale price contract, and there was an interval during which the retailer's profit and utility and supply chain efficiency were better than those under the wholesale price contract. In addition, we described situations in which a CS-E contract is unnecessary. These results should be a useful reference for managerial decisions and organizations.

Morals matter in economic games

Contrary to predictions from Expected Utility Theory and Game Theory, when making economic decisions in interpersonal situations, people take the interest of others into account and express various forms of solidarity, even in one-shot interactions with anonymous strangers. Research in other-regarding behavior is dominated by behavioral economical and evolutionary biological approaches. Psychological theory building, which addresses mental processes underlying other-regarding behavior, is rare. Based on Relational Models Theory (RMT, [1]) and Relationship Regulation Theory (RRT, [2]) it is proposed that moral motives influence individuals' decision behavior in interpersonal situations via conscious and unconscious (automatic) processes. To test our propositions we developed the 'Dyadic Solidarity Game' and its solitary equivalent, the 'Self-Insurance Game'. Four experiments, in which the moral motives "Unity" and "Proportionality" were manipulated, support the propositions made. First, it was shown that consciously activated moral motives (via framing of the overall goal of the experiment) and unconsciously activated moral motives (via subliminal priming) influence other-regarding behavior. Second, this influence was only found in interpersonal, not in solitary situations. Third, by combining the analyses of the two experimental games the extent to which participants apply the Golden Rule ("treat others how you wish to be treated") could be established. Individuals with a "Unity" motive treated others like themselves, whereas individuals with a "Proportionality" motive gave others less then they gave themselves. The four experiments not only support the assumption that morals matter in economic games, they also deliver new insights in how morals matter in economic decision making.

All inequality is not equal: children correct inequalities using resource value

Fairness concerns guide children's judgments about how to share resources with others. However, it is unclear from past research if children take extant inequalities or the value of resources involved in an inequality into account when sharing with others; these questions are the focus of the current studies. In all experiments, children saw an inequality between two recipients—one had two more resources than another. What varied between conditions was the value of the resources that the child could subsequently distribute. When the resources were equal in value to those involved in the original inequality, children corrected the previous inequality by giving two resources to the child with fewer resources (Experiment 1). However, as the value of the resources increased relative to those initially shared by the experimenter, children were more likely to distribute the two high value resources equally between the two recipients, presumably to minimize the overall inequality in value (Experiments 1 and 2). We found that children specifically use value, not just size, when trying to equalize outcomes (Experiment 3) and further found that children focus on the relative rather than absolute value of the resources they share—when the experimenter had unequally distributed the same high value resource that the child would later share, children corrected the previous inequality by giving two high value resources to the person who had received fewer high value resources. These results illustrate that children attempt to correct past inequalities and try to maintain equality not just in the count of resources but also by using the value of resources.

Status, race, and money: the impact of racial hierarchy on willingness to pay

A deeply entrenched status hierarchy in the United States classifies African Americans as lower status than Caucasians. Concurrently, African Americans face marketplace discrimination; they are treated as inferior and poor. Because having money and spending money signify status, we explored whether African Americans might elevate their willingness to pay for products in order to fulfill status needs. In Studies 1 and 2, explicit activation of the race concept led some African Americans to pay more than they would otherwise pay and also more than Caucasians. Individual differences in perceived status disadvantage and racial identification moderated this result. In Study 3, when race was salient, an overt status threat (inferior treatment in a purchasing context) similarly led African Americans, but not Caucasians, to pay more than they would otherwise pay. This research illustrates how African Americans whose status is threatened use spending as a way to assert status.

A New Veil of Ignorance? Commentary on Norton and Ariely (2011)

Norton and Ariely's (2011, this issue) finding that people prefer relatively equal distributions of wealth begs for further research. It is one thing to argue, as T. Frank (2004) has, that people vote against their interests. But Norton and Ariely seem to show that people vote against their preferences. What does that even mean, and how does it happen?