Will Joe the plumber envy Bill Gates? The impact of unflattering social comparisons on individual satisfaction and behaviour

Abstract

We investigate experimentally the impact of unflattering social comparisons on individuals' satisfaction and behaviour. More precisely, we focus on negative interdependent preferences and explore whether they are responsible for leading participants to reduce others' income. In our experiment, participants are randomly paired and receive an endowment. Then participants have to report their satisfaction level after being informed of their own endowment and of their opponent's endowment. Finally participants can choose, or not, to reduce their opponent's endowment incurring a personal cost. We observe: (1) most people report to experience negative interdependent preferences by learning others' higher endowments; (2) although destructive decisions are predominantly undertaken by participants expressing negative interdependent preferences, such preferences fail at predicting decisions to reduce income; (3) absolute difference between participants' endowments affects individuals' satisfaction whereas relative difference modulates participants' decisions to reduce others' income.