The Effect of Pay Transparency on Narcissists: Can Personality Type Predict Reciprocity? Restricted; Files Only

Abstract

Government regulations and popular media push companies to be more transparent about employee wage information. Yet, companies often attempt to keep salary information secret because, when wage dispersion exists, transparency decreases total employee productivity. The fair-wage effort hypothesis (FWEH) models this phenomenon (Akerlof and Yellen 1990). Productivity decreases because, on average, when employees learn they are paid less than others, they engage in negative reciprocity, lowering their productivity. At the same time, on average, employees who learn they are paid more than others do not engage in positive reciprocity. I investigate whether narcissism can predict individual employees’ reciprocal responses after they learn they are being paid more or less than their coworkers. Narcissists may feel more entitled to rewards and may be more likely to seek revenge for perceived injustices than nonnarcissists. I test the hypotheses using an experiment on Amazon Mechanical Turk in which I manipulate pay level and transparency. I find that the FWEH accurately describes average behavior. However, narcissism moderates the strength of individual employees’ reciprocal responses, increasing the magnitude of negative reciprocity and decreasing the magnitude of positive reciprocity.

Table of Contents

1. Introduction............................................................................................................................... 1

 

2. Background............................................................................................................................... 2

2.1 Historical Background on Pay Transparency............................................................................2

2.2 Narcissism .............................................................................................................................. 10

3. Hypotheses Development........................................................................................................ 13

 

4. Methods.................................................................................................................................... 18

5. Results...................................................................................................................................... 22

5.1 Main Analysis ........................................................................................................................ 22

5.2 Analysis of Narcissism Factors and Types............................................................................. 29

5.2.1 Ackerman et al.’s Three-Factor Model................................................................................ 29

5.2.2 Emmon’s Four-Factor Model.............................................................................................. 32

5.2.3 Raskin and Terry’s Seven-Factor Model............................................................................. 33

5.2.4 Vulnerable and Grandiose Narcissism................................................................................. 34

5.3 Robustness Checks.................................................................................................................. 35

5.4 Clustering................................................................................................................................ 37

6. Conclusion............................................................................................................................... 38

Bibliography................................................................................................................................. 42

Figures.......................................................................................................................................... 49

Figure 1: Predictions..................................................................................................................... 49

Figure 2: Task Example................................................................................................................ 50

Figure 3: Experimental Manipulations......................................................................................... 51

Figure 4: Experimental Timeline...................................................................................................52

Figure 5: Difference by Condition................................................................................................ 53

Figure 6: Difference by Narcissism and Pay Level...................................................................... 54

Figure 7: Histogram of Narcissism Scores................................................................................... 55

Tables........................................................................................................................................... 56

Table 1: Participant Population..................................................................................................... 56

Table 2: Dependent Variable Descriptive Statistics: Variable Means (Standard Deviations)….. 57

Table 3: ANOVA. Test of H1a and H1b. The Effect of Transparency and Low Pay on FPP

and Difference................................................................................................................................58

 

Table 4: Retention Analysis.......................................................................................................... 59

Table 5: Independent Variable Descriptive Statistics and Correlation Tables............................. 60

Table 6: Tests of H2a and H2b..................................................................................................... 62

Table 7: Analysis of Ackerman et al.’s Narcissism Factors......................................................... 63

Table 8: Analysis of Other Narcissism Factor Structures............................................................. 65

Table 9: Analysis of Narcissism Types........................................................................................ 66

Table 10: Robustness Checks....................................................................................................... 67

Appendix A: NPI-16 Questions and Factor Structure...................................................................68

About this Dissertation

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School	Laney Graduate School
Department	Business
Degree	Ph.D.
Submission	Dissertation
Language	English
Research Field	Business Administration, Accounting
Keyword	dark triad narcissism fair wage effort hypothesis reciprocity pay transparency
Committee Chair / Thesis Advisor	Towry, Kristy, Emory University
Committee Members	Sedatole, Karen, Emory University Kadous, Kathryn , Emory University Lilienfeld, Scott, Emory University

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