Discussion of “the effects of vertical pay dispersion: Experimental evidence in a budget setting”

Guo, Libby, and Liu (2017) (hereafter GLL), examine how pairs of experimental subjects interact in a game framed as a funding request from a privately informed subordinate to a superior. When the superior’s pay is higher than the subordinate’s, subordinates display more self-serving dishonesty and superiors are more tolerant of it than when their pay is the same. In this discussion, I compare GLL’s design with an ultimatum game, consider additional tensions that arise in pay-level comparisons, address the applicability of their results, and suggest some extensions. I conclude by calling for new theory that regularizes GLL’s surprising findings.