"Fair" allocations of salaries and taxes.

Abstract

Judges were asked to "fairly " allocate salaries to hypothetical faculty members on the basis of their merit ratings. Individual merit ratings, total budgets to be distributed, and distributions of merit ratings for the entire group were manipulated. In another set of studies, judges were asked to "fairly" assign income taxes to hypothetical persons given their salaries. Individual salaries, amounts of revenue to generate, and distributions of salaries for the group were varied. A theory of relative equity is presented that successfully accounts for both sets of results. It is hypothesized that an equitable state is one in which the relative position of a stimulus (e.g., merit or salary) in the distribution of stimuli matches the relative position of the response (e.g., salary or tax) in the distribution of responses. The relative position of a stimulus or response is denned as its range-frequency value based on the range-frequency compromise. What is a "fair " method for distributing a resource or reward among a group of contributing individuals? For example, consider a group of faculty members at an academic institution, each of whom participates in teaching, research, service, and so forth. How should a fixed budget be divided among them to determine

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