them. Fact C is tested and partially confirmed by Gerald Leventhal and David Anderson (1970), but is also fairly intuitive. In the ultimatum game, a 90% split (regarded as unfair) is (intuitively) far more likely to be punished if the amount to be split is $1 than if it is $1 million. A crucial point (as noted in Akerlof 1982) is that notions of fairness depend on the status quo and other reference points. Experiments (Fehr and Schmidt 2000) and surveys (Kahneman, Knetsch and Thaler 1986) indicate that people have clear notions of fairness based on particular reference points (disagreements can arise in the choice of reference point). Thus for example firms who raise prices or lower wages to take advantage of increased demand or increased labour supply are frequently perceived as acting unfairly, where the same changes are deemed acceptable when the firm makes them due to increased costs (Kahneman et al.). In other words, in people's intuitive "naïve accounting" (Rabin 1993), a key role is played by the idea of entitlements embodied in reference points (although as Dufwenberg and Kirchsteiger 2000 point out, there may be informational problems, e.g. for workers in determining what the firm's profit actually is, given tax avoidance and stock-price considerations). In particular, it is perceived as unfair for actors to increase their share at the expense of others, although over time such a change may become entrenched and form a new reference point which (typically) is no longer in itself deemed unfair. Sociological efficiency wage models Solow (1981) argued that wage rigidity may be at least partly due to social conventions and principles of appropriate behaviour, which are not entirely individualistic in origin. Akerlof (1982) provided the first explicitly sociological model leading to the efficiency wage hypothesis. Using a variety of evidence from sociological studies, Akerlof argues that worker effort depends on the work norms of the relevant reference group. In Akerlof's partial gift exchange model, the firm can raise group work norms and average effort by paying workers a gift of wages in excess of the minimum required, in return for effort above the minimum required. The sociological model can explain phenomena inexplicable on neoclassical terms, such as why firms do not fire workers who turn out to be less productive; why piece rates are so little used even where quite feasible; and why firms set work standards exceeded by most workers.