Abstract:We investigate how team and individual performances of players in the National Basketball Association respond to variations in intra-team pay inequality. By breaking down team dispersion into conditional and expected components, we find that expected pay dispersion has a positive effect on team and individual performance. We find that team and individual performances are essentially orthogonal to conditional pay inequality, counter to the hypotheses of fairness and cohesion proposed in the literature both for sports and general occupations. A change in collective bargaining regime in 1996 had little impact on either team or player productivity. Acknowledgement: We gratefully acknowledge stimulating discussions on the topic of this paper with Leif Brandes, Alex Bryson, Bernd Frick, Rafael Gomez, Colin Green and Leo Kahane. We also acknowledge helpful comments from participants at the Scottish Economic Society conference, Perth and the valuable suggestions made by a referee.