BazermanMoore

Perceptions of Fairness 119
in these economic games for each of the societies tested. However, the researchers did
find that while economic and demographic variables did not predict how the ultimatum
game was played, the patterns of everyday interaction explained variations between societies.
Fairness appears to be a universal concept affecting decisions, but implementation
of fairness depends on cultural norms.
Research by Brosnan and de Waal (2003) even offers a compelling demonstration
of cross-species generality in fairness judgments. They showed that capuchin monkeys
rebelled when they were given smaller rewards than their fellow monkeys for performing
the same task, in much the same way that unequal payment undermines workers’
motivation (Fehr, Kirchsteiger, & Reidl, 1993). These angry capuchins indignantly refused
to eat their cucumbers if their neighbors received much tastier grapes.
When We Are Concerned about the Outcomes of Others
Humans and capuchin monkeys both care about what happens to others. People may
willingly pay in order to harm an adversary or forgo gains to help a loved one. In addition,
people are concerned about how their own rewards compare to the rewards of
others. Recognizing these concerns, organizations create elaborate job grading systems
to specify the compensation available to employees at each level within the organization.
Salaries, bonuses, and benefits are carefully calculated within these specified
parameters so employees will believe they are being fairly compensated relative to
others in comparable positions. In addition, organizations strive to conceal salary data
to avoid social comparisons and perceptions of unfairness. This elaborate behavior is
justified by research showing a positive correlation between pay equity of a corporation
and the quality of its products (Cowherd & Levine, 1992). Similarly, Depken
(2000) shows a negative relationship between the size of pay differentials within a
Major League Baseball team and how well that team performs, judging by the objective
standard of winning percentage. The smaller the gap between the highest-paid
and the lowest-paid members, the better the team as a whole works together. Clearly,
across a broad variety of situations, individuals not only exhibit concern for how their
own rewards compare to those of relevant others, but also show resulting changes in
their behavior as well.
As recent college graduates entering the workforce learn, significant differences in
payment exist across industries. Those who go into investment banking might earn
$80,000 or more in their first year while their similarly qualified peers in publishing or
architecture make less than half that amount. How can that unfair difference persist in
the market? Two particularly interesting facts about this cross-industry wage differential
can be explained by how concerns for fairness are formed (Thaler, 1991). First,
there is an observed correlation between high-profit industries and high wages. Second,
if one job within an industry is highly paid, other jobs in that industry also tend to be
highly paid. Perceptions of the fair comparison wage are related to the profitability of a
given firm and what other individuals in closely related jobs can earn (Akerlof & Yellen,
1990). This suggests that people make comparisons within the firm and to other firms in
the industry, not across industries. This may account for the acceptance of differences
in payment between industries such as banking and publishing.