Managers paid less when they could keep what was left over
In a German lab, those acting as managers offered just over €8 when they could keep the surplus, and just over €10 when they could not.
The key idea
When the surplus went to the person paying, offers were lower. Workers’ views of appropriate pay were similar.
The study, in plain language
Setting a price for work may feel different when the person commissioning it also keeps what they do not pay. To explore the choice, German lab participants took the role of a manager or worker in a manual pen task.
Some managers could keep the leftover money, while others had to give it to research. Offers were lower when the surplus stayed with the manager. Having tried a similar task beforehand was associated with higher offers, especially under the rule that prevented managers from benefiting from paying less. Meanwhile, workers considered similar pay appropriate across the conditions.
What they found
- Managers offered less when they could keep the money they did not pay.
- After trying a similar task, offers were higher, especially when higher pay did not reduce the manager’s earnings.
- Workers considered similar pay appropriate across the compared conditions.
How they studied it
In Germany, participants took the roles of manager or worker. Managers decided how much to pay for assembling and disassembling pens, under different rules for leftover money and for trying the task before deciding.
What the study cannot show
- The task, groups, and pay scenarios were specific. The amounts chosen are not wages observed in the labor market.
- The study does not establish a universal fair wage or measure real effects on employment or productivity.
Something to think about
If you have ever set pay for a task, did it matter what happened to the money you did not pay? And did it matter that you had tried the task before?
The original study
Setting adequate wages for workers: Managers’ work experience, incentive scheme and gender matter
Source under CC BY 4.0. English adaptation and explanation by PaperFlow, with AI assistance. The text has been reorganized for a general audience; it is not the complete paper and does not imply endorsement by its authors.
One study alone does not represent a field's consensus. Educational content does not replace professional advice. Report a possible error.
