Fair pay allocation decisions: from a regulatory focus theory view.

Abstract

Theorists have proposed two seemingly contradictory ways to allocate pay among interdependently working individuals--equity-based and equality-based pay--a problem called theoretical dilemma. This study diverges from the dominant view of the level of interdependence consideration and suggests a novel factor, group goal, as a determinant of fair pay allocation decisions. By evoking regulatory focus theory, I propose that individuals pursuing gain-oriented group goals prefer to differentiate pay among group members more than individuals pursuing nonloss-oriented group goals, because of different levels of cooperation and independent/interdependent self perceptions. Moreover, I propose that the theorized processes are strengthened when task complexity is high. The results from two laboratory experiments show general support of the theorized relationships.