Ben D’Exelle (U East Anglia, UK) Competitive versus Destructive Envy: Evidence from a Real Effort Experiment

Social comparison can have a strong influence on individual effort. Inequality created by variation in effort could stimulate competition and hence increase effort, but it could also reduce effort where destructive peer reactions are expected. At the same time, taking into account the multidimensional character of effort, these effects might differ in the effort put into the quantity and the quality of the generated output. To investigate these effects, we use a real effort experiment with students in Uganda, in which we vary whether participants receive relative performance feedback and whether they have the option to lower the earnings of other participants through so-called 'money-burning'. We find that relative performance feedback increases the quality of the output and the earnings. However, when combined with money-burning it decreases the quantity but not the quality of the output.