When What You Want is What You Get: Pay Dispersion and Communal Sharing Preference

The question of whether pay structures should be compressed or dispersed remains unanswered. We argue that pay dispersion can yield uncertainty regarding others' intentions and behaviors; as a result, individuals take a greater risk trusting their group members as pay spreads widen. Accordingly, we explore the conditions under which individuals are more willing to take this risk by viewing their group members as trustworthy even when pay is dispersed. Specifically, preferences for how relationships and resources should be structured in groups should help to determine when pay dispersion relates to trustworthiness perceptions. We hypothesise that the cross-level interaction between preferences for communal sharing (Level 1)that is, the extent to which individuals prefer communal, egalitarian structures in their groupsand pay dispersion (Level 2) is associated with trust perceptions. Data drawn from a sample of university professors support our hypothesised cross-level interaction, and show that when pay dispersion is greater, individuals perceive their group members as more trustworthy only when they have weak preferences for communal sharing. Our results signify the importance of individual attributes to understanding pay dispersion's effects, and show that trust is fostered when preferences and pay conditions are aligned.