The social context of a discretionary allocation system: A threat to one's status in a group

People are sensitive to the way their outcomes are determined. Allocation systems can be based on clear, predetermined rules and procedures (rule-based systems) or they can also allow for a high degree of discretion of an authority figure, based on an interaction with/observation of that person for whom the outcomes are allocated (discretion-based systems). I argue that the comparison to others in a discretionary allocation system elicits the fear that others (especially others who satisfy the same ‘eligibility rule’) will gain better outcomes than the self, following the discretionary decision. The potential relative ‘failure’ in a discretionary allocation system, and the attribution people and others around them might make following such relative ‘failure’ represent a threat to one’s status in a group. In a field study and a lab experiment I show that when the presence of others is more salient, people are less likely to prefer discretion. In a follow up scenario study I document the specific role of status concerns in determining people’s preference for discretionary allocation systems. This work has important implications for literature on job design by conceptualizing and examining discretion in allocation decisions from the perspective of those at the receiving end of the outcomes.