Optimal incentive contracts under inequity aversion
نویسندگان
چکیده
منابع مشابه
Optimal incentive contracts under inequity aversion
Optimal Incentive Contracts under Inequity Aversion We analyze the Moral Hazard problem, assuming that agents are inequity averse. Our results differ from conventional contract theory and are more in line with empirical findings than standard results. We find: First, inequity aversion alters the structure of optimal contracts. Second, there is a strong tendency towards linear sharing rules. Thi...
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Inequity aversion is a special form of other regarding preferences and captures many features of reciprocal behavior, an apparently robust pattern in human nature. Using this concept we analyze the Moral Hazard problem and derive several results which differ from conventional contract theory. Our three key insights are: First, inequity aversion plays a crucial role in the design of optimal cont...
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This paper analyzes the interaction of fairness concerns and social comparisons with asymmetric information and incentives within the context of a firm’s employment decision. It studies optimal, incentive-compatible employment contracts if each worker is inequity averse he suffers from being ‘worse off’ than his colleagues and has private information about his productivity. Inequity aversion is...
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When only group performance is observable, incentives depend on the distribution of payments between group members. This distribution differs between firms. In this paper, we analyze whether the coexistence of various group performance-based payment schemes on the labor market can be related to agents’ heterogeneity. We test by a laboratory experiment whether agents self-select between a compet...
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The standard contract theory adopts the traditional hypothesis of pure self-interest. However, a series of game experiments have proven that people are not any self-interest but also inequity averse. Then, how will the inequity aversion influence the optimal contract for multiple agents? This paper attempts to obtain new theoretical insights by incorporating inequity aversion into the standard ...
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ژورنال
عنوان ژورنال: Games and Economic Behavior
سال: 2010
ISSN: 0899-8256
DOI: 10.1016/j.geb.2009.12.007