Joint Lecture by the Department of Economics and the Research Center for Human Development Economics on May 29th by Stefan Trautmann：Fairness Properties of Compensation Schemes

Lecture Topic：Fairness properties of compensation schemes

Time: Thursday, May 29, 2025, 15:20–16:30

Venue: Conference Room 1610, Houzhu Building

Lecturer: Professor Stefan Trautmann (Tilburg University)

Host: Associate Professor Xu Hui (BNU Business School; Research Center for Human Development Economics)

Abstract

How do different characteristics of pay-for-performance schemes affect fairness perceptions? In two studies, we systematically examine three major categories of incentive schemes: continuous piece rate incentives, discrete bonus schemes, and tournament incentives. We find that pay inequality has a strong negative effect on perceived fairness. When controlling for pay inequality, people consider piece rate schemes fairer than discrete bonus schemes—particularly tournament designs. Adding performance-dependent resource advantages or handicaps negatively influences perceived fairness. We find that procedural fairness judgments are an important factor affecting overall judgments, and a third study demonstrates that the latter have relevant behavioral consequences.

Biography of the Lecturer

Stefan Trautmann obtained his PhD in Economics from Erasmus University Rotterdam, the Netherlands, in 2009. He then joined Tilburg University, where he worked as a postdoctoral researcher in the Department of Social Psychology, an assistant professor in the Department of Economics, and was promoted to tenured associate professor. In 2014, he was appointed Full Professor of Behavioral Finance at Heidelberg University, Germany.

Professor Trautmann serves as an associate editor for multiple journals, including Management Science, Journal of Economic Behavior and Organization, and Journal of Risk and Uncertainty. His research interests include financial decision-making under uncertainty, social preferences and morality, and broader economic decision-making. His research has been published in top economics, finance, and psychology journals such as American Economic Review, Management Science, and Psychological Science, and has been reported by media outlets such as CNN and BBC.

He received the Pierson Medal in 2012 for his research on economic preferences and the Heinrich Wiemer-Prize for Economics in 2024 for his research on inflation expectations. He has served as an expert advisor to the World Bank, the European Commission, and the German Federal Institute for Risk Assessment.