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A behavioral Explanation for the Relative Performance Evaluation Puzzle

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  • Chaim FERSHTMAN
  • Hans K. HVIDE
  • Yoram WEISS

Abstract

We study the effects of competitive preferences, where Chief Executive Officers (CEOs) compare their wage to the wage of other CEOs within the same industry, and derive utility from being ahead of them. We show that such social concerns work in the direction of CEO wages being positively correlated, in contrast to the Relative Performance Evaluation hypothesis, but consistent with several empirical studies.

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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2003)
Issue (Month): 71-72 ()
Pages: 349-361

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Handle: RePEc:adr:anecst:y:2003:i:71-72:p:13

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Cited by:
  1. Fitzenberger, Bernd & Kunze, Astrid, 2005. "Vocational Training and Gender: Wages and Occupational Mobility among young Workers," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 05-66, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Kräkel, Matthias, 2005. "Emotions and the Optimality of Unfair Tournaments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 45, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Andrea Patacconi & Florian Ederer, 2005. "Interpersonal Comparison, Status and Ambition in Organisations," Economics Series Working Papers, University of Oxford, Department of Economics 222, University of Oxford, Department of Economics.
  4. Ramalingam, Abhijit, 2009. ""Endogenous" Relative Concerns: The Impact of Workers' Characteristics on Status and Pro ts in the Firm," MPRA Paper 18759, University Library of Munich, Germany.
  5. Sookram, Sandra & Strobl, Eric, 2008. "The Role of Educational Choice in Occupational Gender Segregation: Evidence from Trinidad and Tobago," IZA Discussion Papers 3549, Institute for the Study of Labor (IZA).
  6. Fershtman, Chaim & Hvide, Hans K & Weiss, Yoram, 2003. "Cultural Diversity, Status Concerns and the Organization of Work," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3982, C.E.P.R. Discussion Papers.
  7. José Ignacio García Pérez & María Dolores Morales López, 2006. "Discriminación salarial en el mercado de trabajo español con especial referencia al caso de Andalucía," Economic Working Papers at Centro de Estudios Andaluces, Centro de Estudios Andaluces E2006/18, Centro de Estudios Andaluces.
  8. Llorens, Vanessa & De la Rica Goiricelaya, Sara & Dolado, Juan J., 2004. "Ceilings and Floors? Gender Wage Gaps by Education in Spain," DFAEII Working Papers 2005-01, University of the Basque Country - Department of Foundations of Economic Analysis II.
  9. Dolado, Juan J. & Llorens, Vanesa, 2004. "Gender Wage Gaps by Education in Spain: Glass Floors versus Glass Ceilings," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4203, C.E.P.R. Discussion Papers.
  10. Juan J. Dolado & Florentino Felgueroso & Miguel Almunia, 2008. "Do men and women-economists choose the same research fields?: Evidence from top-50 departments," Working Papers 2008-15, FEDEA.
  11. Pradeep Dubey & John Geanakoplos & Ori Haimanko, 2011. "Prizes versus Wages with Envy and Pride," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1835, Cowles Foundation for Research in Economics, Yale University.
  12. Pradeep K. Dubey & John Geanakoplos & Ori Haimanko, 2012. "Prizes Versus Wages with Envy and Pride," Levine's Working Paper Archive 786969000000000336, David K. Levine.
  13. Fernando Munoz-Bullon, 2008. "The gap between male and female pay in the Spanish tourism industry," Business Economics Working Papers, Universidad Carlos III, Departamento de Economía de la Empresa wb085713, Universidad Carlos III, Departamento de Economía de la Empresa.
  14. Juan J. Dolado & Vanesa Llorens, 2004. "Gender Wage Gaps By Education In Spain: Glass Floors Vs. Glass Ceilings," Working Papers, CEMFI wp2004_03, CEMFI.
  15. Pradeep K. Dubey & John Geanakoplos & Ori Haimanko, 2005. "Prizes versus Wages with Envy and Pride," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1537, Cowles Foundation for Research in Economics, Yale University.

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