We show that if agents are risk neutral, prizes outperform wages if and only if there is su¢ cient pride and envy relative to the noisiness of performance. If agents are risk averse, prizes are a necessary supplement to wages (as bonuses). Keywords: Envy, Pride, Wages, Prizes, Bonus JEL Classi…cation: C72, D01, D23, L14.

An overlapping generations model with long run inflation risk and a cash-in-advance constraint is used to derive a second-order accurate closed-form solution for the inflation risk premium on long-term government debt. The model predicts that the inflation risk premium depends crucially on the relative importance of nominal bonds and capital as sources of retirement consumption. In a calibrated...

We study a principal-agent problem with multiple identical agents, where the action-dependent stochastic relationship between actions and output is perceived to be ambiguous, and agents are ambiguity averse. We argue that ambiguity, and particularly ambiguity aversion, make it more attractive for the principal to choose a tournament. If agents are risk neutral, but ambiguity averse, we show tha...

We follow a new approach for the implementation of cooperative bargaining solutions in a non-cooperative framework. We model what happens in case of disagreement in order to give players the incentive to reach an agreement which coincides with a cooperative solution. Our model consist of two phases. Many of the standard bargaining procedures can constitute the first phase. The second mechanism ...

Differences in the characteristics of behavior-based versus outcome-based salesforces are explored The most important differences between the two groups are intrinsic motivation and recognition motivation. The results indicate that professional competence, team orientation, risk aversion, sales support orientation, customer orientation and planning orientation are not significant, Behavior-base...

A government designs transfers to agents in the absence of information on their preferences. The second-best allocation is equal sharing among citizens when the awards are deterministic. We provide a necessary and su cient condition under which lotteries improve upon the egalitarian outcome. The condition requires that the citizens with large social weights have low risk aversion, and that the ...

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