Maximizing joint gains

Stephen Michael Garcia, Max H. Bazerman, Dale T. Miller, Harvard Business School. Division of Research

In a choice between equal payoffs (e.g., self gets $500 / other person gets $500) and more lucrative but disadvantageously unequal payoffs (e.g., self gets $600 / other person gets $800 ), individuals willingly trade disadvantageous inequality for extra profit (e.g., Blount and Bazerman, 1996), choosing the more lucrative but disadvantageously unequal payoff. The present analysis, however, explores how the transaction utility (Thaler, 1985; 1999), the perceived value of such "deals," depends on whether allocation recipients come from the same social category (e.g., same gender) or different ones (e.g., females versus males). Studies 1 - 3 test the prediction that individuals tend to trade disadvantageous inequality for greater profit when allocations recipients share the same social category (e.g., within groups), but do not when recipients belong to different social categories (e.g.,...