We employ an experimental labour setting to study fairness in the division of gains from productive activity. The focus is on the impact of power structures on allocation decisions and on fairness perceptions. Two types of actors are involved in generating a gain, but only one contributes actively by completing a real-effort task. In three treatments, decision power to divide the gain is assigned (1) to the inactive, (2) jointly to the inactive and the active, and (3) to the active. Results show that the impact of power goes beyond changing final allocations: it also significantly alters fairness perceptions. Decision power - in particular absolute power – mediates and significantly enhances self-serving biases. Results complement studies on the psychology of fairness perceptions. Moreover, the paper discusses implications for organizational design.
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