Relative Earnings and Giving in a Real-Effort Experiment

Abstract

This paper investigates the relationship between relative earnings and giving in a two-stage, real-effort experiment. In the first stage, four players compete in a tournament that determines their earnings. In the second stage, they decide whether to make a transfer to one or more of their group members. Our main finding is that those ranked first are significantly less likely to give than those ranked second. This difference disappears if individuals learn about the second stage after earning their income or if earnings are randomly determined. This suggests that our main finding is driven by selection based on other-regarding preferences. JEL: D64, J31