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October 1, 2013
Abstract
We conduct a real-effort laboratory experiment to examine how disclosure of information about the pay received by co-workers affects work performance in Germany and China. We employ an individual piece-rate setting in which a piece rate is received for each unit of output successfully produced. We find that receiving information that one’s co-workers are all receiving the same piece rate as oneself has no significant effect on performance compared to non-disclosure. In contrast, learning that one co-worker is receiving a higher piece rate than oneself does significantly affect performance. In particular, receiving such information initially results in a larger performance increase than receiving information that others are all receiving the same piece rate as oneself. However, this performance gap decreases toward the end of the experiment.