962 X.Wang/Journal of Economic Psychology 33 (2012)951-962 This results of this study suggest that low minimum wage under asymmetric knowledge may potentially have a negative spillover effect on wages.This has important policy implications,especially in developing countries where minimum levels are relatively low and low-income workers have less access to information and less knowledge about public policies.The government should not only focus on the minimum wage policy itself,it also needs to educate the workers who are poten- tially affected by the policy.Furthermore,when information access is limited and compliance of minimum wage laws is hard to monitor,we need to be aware of the possible negative welfare impact of low minimum wage standards on some low in- come workers. The findings of this study may also help to explain why different empirical studies about the minimum wage impacts on employment and wages have found inconsistent results.The degree of information access and the level of minimum wage standards may all play important roles.Future research can investigate this issue by incorporating the factors we discussed in the experimental study. Acknowledgements This project has been supported by the Fundamental Research Funds for the Central Universities,and the Research Funds of Renmin University of China(10XNK069).The author would like to thank Ernst Fehr,George Loewenstein,Jack Knetsch, and Christian Zehnder for their helpful discussions on this study and two referees for their comments on the paper.I also thank my students for their help in the experiment,with special thanks to Hengchen Dai. References Adams.S.,Neumark,D.(2005).Living wage effects:New and improved evidence.Economic Development Quarterly.19(1).80-102. Ariely.D.,Loewenstein,G..Prelec,D.(2003).Coherent arbitrariness:Stable demand curves without stable preferences.Quarterly Journal of Economics, CXV1L.73-105. Ashenfelter.O..Smith.R.(1979).Compliance with the minimum wage law.Journal of Political Economy.87(2).333-350. Babcock,L.Loewenstein,G..Issacharoff,S.Camerer,C.(1995a).Biased judgments of fairness in bargaining.American Economic Review,85,1337-1343. Babcock.L.Loewenstein.G.&Wang.X(1995b)The Relationship between uncertainty.the contract zone.and efficiency in a bargaining experiment. Journal of Economic Behavior and Organization,27.475-485. Babcock,L..Wang.X..Loewenstein,G.(1996)Choosing the wrong pond:Social comparisons that reflect a self-serving bias.Quarterly Journal of Economics, ,1-19. Brandts,J.,Charness,G.(2004).Do labour market conditions affect gift exchange?Some experimental evidence.Economic Joumal,114(497).684-708. Camerer,C.(2003).Behavioral game theory:Experiments in strategic interaction,roundtable series in behavioral economics.Princeton,NJ:Princeton University Press Card,D.,Krueger.A B.(1994).Minimum wages and employment:A case study of the fast-food industry in New Jersey and Pennsylvania.American Economic Review,84(4).772-793. Charness,G..Kuhn,P.(2010)Lab labor:What can labor economists learn from the lab?In O.Ashenfelter.D.Card (Eds.).Handbook of labor economics(Vol. 4) Du,Yang.Pan.W.(2009).Minimum wage regulation in china and its applications to migrant workers in the urban labor market.China &World Economy. 17八2).79-93 Falk,A.,Fehr,E.(2003).Why labour market experiments?Labour Economics,10,399-406. Falk,A.,Heckman.J.(2009).Lab experiments are a major source of knowledge in the social sciences.Science,326,535. Falk.A..Fehr.E&Zehnder.C.(2006).Fairness perceptions and reservation wages-The behavioral effects of minimum wage laws.Quarterly Journal of Economics,121(4)1347-1381. Fehr,E,Gachter,S.(2000).Fairness and retaliation-The economics of reciprocity.Journal of Economic Perspectives XIV,159-181 Fischbacher.U.(1999).Z-Tree:Experimental software.Institute for Empirical Research in Economics.University of Zurich. Flinn,C.(2006)Minimum wage effects on labor market outcomes under search,matching.and endogenous contact rates.Econometrica,74(4).1013-1062. Guth,W.,Damme,E.(1998).Information,strategic behavior.and fairness in ultimatum bargaining:An experimental study.Joumal of Mathemarical Psychology.42.227-247. Haisley.E.&Weber.R.(2010)A self-serving interpretations of ambiguity in other-regarding behavior.Games and Economic Behavior,68.614-625. Han,Z.Kong,L(2006).Treat the Migrant workers in Guangdong-A survey on the minimum wage for Migrant workers in Guangdong.Survey and,Report. (Vol.2)[in Chinese]. Manning.A.(2003).Monopsony in motion.Princeton,NI:Princeton University Press. Owens.M.H.,Kagel.J.(2010).Minimum wage restrictions and employee effort in incomplete labor markets:An experimental investigation.Joumal of Economic Behavior Organization,73.317-326. Strol,E..Frank,W.(2003).Minimum wages and compliance.The case of trinidad and tobago.Economic Development and Cultural Change,51(2).427-450. Wang.J.Gunderson,M.(2011).Minimum wage impacts in China:Estimates from a prespecified research design,2000-2007.Contemporary Economic Policy.293).392-406. Xie,Y.(2010).The implementation of minimum wage policy for migrant workers and its determinants.Economic Management,32(03)(in Chinese).This results of this study suggest that low minimum wage under asymmetric knowledge may potentially have a negative spillover effect on wages. This has important policy implications, especially in developing countries where minimum levels are relatively low and low-income workers have less access to information and less knowledge about public policies. The government should not only focus on the minimum wage policy itself, it also needs to educate the workers who are poten￾tially affected by the policy. Furthermore, when information access is limited and compliance of minimum wage laws is hard to monitor, we need to be aware of the possible negative welfare impact of low minimum wage standards on some low in￾come workers. The findings of this study may also help to explain why different empirical studies about the minimum wage impacts on employment and wages have found inconsistent results. The degree of information access and the level of minimum wage standards may all play important roles. Future research can investigate this issue by incorporating the factors we discussed in the experimental study. Acknowledgements This project has been supported by the Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin University of China (10XNK069). The author would like to thank Ernst Fehr, George Loewenstein, Jack Knetsch, and Christian Zehnder for their helpful discussions on this study and two referees for their comments on the paper. I also thank my students for their help in the experiment, with special thanks to Hengchen Dai. References Adams, S., & Neumark, D. (2005). Living wage effects: New and improved evidence. Economic Development Quarterly, 19(1), 80–102. Ariely, D., Loewenstein, G., & Prelec, D. (2003). Coherent arbitrariness: Stable demand curves without stable preferences. Quarterly Journal of Economics, CXVIII, 73–105. Ashenfelter, O., & Smith, R. (1979). Compliance with the minimum wage law. Journal of Political Economy, 87(2), 333–350. Babcock, L., Loewenstein, G., Issacharoff, S., & Camerer, C. (1995a). Biased judgments of fairness in bargaining. American Economic Review, 85, 1337–1343. Babcock, L., Loewenstein, G., & Wang, X. (1995b). The Relationship between uncertainty, the contract zone, and efficiency in a bargaining experiment. Journal of Economic Behavior and Organization, 27, 475–485. Babcock, L., Wang, X., & Loewenstein, G. (1996). Choosing the wrong pond: Social comparisons that reflect a self-serving bias. Quarterly Journal of Economics, CXI, 1–19. Brandts, J., & Charness, G. (2004). Do labour market conditions affect gift exchange? Some experimental evidence. Economic Journal, 114(497), 684–708. Camerer, C. (2003). Behavioral game theory: Experiments in strategic interaction, roundtable series in behavioral economics. Princeton, NJ: Princeton University Press. Card, D., & Krueger, A. B. (1994). Minimum wages and employment: A case study of the fast-food industry in New Jersey and Pennsylvania. American Economic Review, 84(4), 772–793. Charness, G., Kuhn, P. (2010). Lab labor: What can labor economists learn from the lab? In O. Ashenfelter, & D. Card (Eds.), Handbook of labor economics (Vol. 4). Du, Yang, & Pan, W. (2009). Minimum wage regulation in china and its applications to migrant workers in the urban labor market. China &World Economy, 17(2), 79–93. Falk, A., & Fehr, E. (2003). Why labour market experiments? Labour Economics, 10, 399–406. Falk, A., & Heckman, J. (2009). Lab experiments are a major source of knowledge in the social sciences. Science, 326, 535. Falk, A., Fehr, E., & Zehnder, C. (2006). Fairness perceptions and reservation wages – The behavioral effects of minimum wage laws. Quarterly Journal of Economics, 121(4), 1347–1381. Fehr, E., & Gächter, S. (2000). Fairness and retaliation – The economics of reciprocity. Journal of Economic Perspectives XIV, 159–181. Fischbacher, U. (1999). Z-Tree: Experimental software. Institute for Empirical Research in Economics, University of Zurich. Flinn, C. (2006). Minimum wage effects on labor market outcomes under search, matching, and endogenous contact rates. Econometrica, 74(4), 1013–1062. Güth, W., & Damme, E. (1998). Information, strategic behavior, and fairness in ultimatum bargaining: An experimental study. Journal of Mathematical Psychology, 42, 227–247. Haisley, E., & Weber, R. (2010). A. self-serving interpretations of ambiguity in other-regarding behavior. Games and Economic Behavior, 68, 614–625. Han, Z., & Kong, L. (2006). Treat the Migrant workers in Guangdong – A survey on the minimum wage for Migrant workers in Guangdong. Survey and, Report. (Vol. 2) [in Chinese]. Manning, A. (2003). Monopsony in motion. Princeton, NJ: Princeton University Press. Owens, M. H., & Kagel, J. (2010). Minimum wage restrictions and employee effort in incomplete labor markets: An experimental investigation. Journal of Economic Behavior & Organization, 73, 317–326. Strol, E., & Frank, W. (2003). Minimum wages and compliance. The case of trinidad and tobago. Economic Development and Cultural Change, 51(2), 427–450. Wang, J., & Gunderson, M. (2011). Minimum wage impacts in China: Estimates from a prespecified research design, 2000–2007. Contemporary Economic Policy, 29(3), 392–406. Xie, Y. (2010). The implementation of minimum wage policy for migrant workers and its determinants. Economic Management, 32(03) (in Chinese). 962 X. Wang / Journal of Economic Psychology 33 (2012) 951–962