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Piece-Rate Contracts For Other-Regarding Workers

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Author Info

  • WILLIAM S. NEILSON
  • JILL STOWE

Abstract

"When workers are paid with piece rates, inequality arises naturally. We consider workers who care about income comparisons and are either status seeking or inequality averse. We identify circumstances under which inequality attitudes lead workers to exert more effort than they would otherwise, and also circumstances under which workers' inequality attitudes lead firms to set lower piece rates than they would otherwise. The key behavioral assumption for both of these results to hold when workers are identical is behindness aversion, the property that changes in inequality matter more to the worker when he is behind than when he is ahead". ("JEL" D01, J33, M52) Copyright (c) 2008 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 48 (2010)
Issue (Month): 3 (07)
Pages: 575-586

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Handle: RePEc:bla:ecinqu:v:48:y:2010:i:3:p:575-586

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Cited by:
  1. Bartling, Björn & von Siemens, Ferdinand A., 2010. "The intensity of incentives in firms and markets: Moral hazard with envious agents," Labour Economics, Elsevier, vol. 17(3), pages 598-607, June.
  2. Markus Brunner & Kai Sandner, 2012. "Social comparison, group composition, and incentive provision," International Journal of Game Theory, Springer, vol. 41(3), pages 565-602, August.
  3. Pradeep Dubey & John Geanakoplos & Ori Haimanko, 2011. "Prizes versus Wages with Envy and Pride," Cowles Foundation Discussion Papers 1835, Cowles Foundation for Research in Economics, Yale University.
  4. Sandner, Kai, 2008. "Balancing Performance Measures When Agents Behave Competitively in an Environment With Technological Interdependencies," Discussion Papers in Business Administration 2113, University of Munich, Munich School of Management.
  5. Kragl, Jenny & Gogova, Martina, 2013. "Wage Bargaining when Workers Have Fairness Concerns," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79790, Verein für Socialpolitik / German Economic Association.
  6. Bartling, Björn, 2012. "Multi-tasking and inequity aversion in the linear–exponential–normal moral hazard model," Economics Letters, Elsevier, vol. 116(3), pages 523-525.
  7. Gürtler, Marc & Gürtler, Oliver, 2011. "Inequality aversion and externalities," Working Papers IF36V1, Technische Universität Braunschweig, Institute of Finance.
  8. Bartling, Björn, 2011. "Relative performance or team evaluation? Optimal contracts for other-regarding agents," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 183-193, August.
  9. Gürtler, Marc & Gürtler, Oliver, 2012. "The interaction of explicit and implicit contracts: A signaling approach," Working Papers IF38V1, Technische Universität Braunschweig, Institute of Finance.
  10. Dominik Erharter, 2013. "Screening Experts' Distributional Preferences," Working Papers 2013-27, Faculty of Economics and Statistics, University of Innsbruck.
  11. Küpper, Hans-Ulrich & Sandner, Kai, 2008. "Differences in Social Preferences - Are They Profitable for the Firm?," Discussion Papers in Business Administration 2122, University of Munich, Munich School of Management.
  12. Robert Dur & Jan Tichem, 2012. "Social Relations and Relational Incentives," Tinbergen Institute Discussion Papers 12-054/1, Tinbergen Institute.
  13. Bartling, Björn & Siemens, Ferdinand von, 2007. "Equal Sharing Rules in Partnerships," Discussion Papers in Economics 2027, University of Munich, Department of Economics.
  14. Pradeep K. Dubey & John Geanakoplos & Ori Haimanko, 2012. "Prizes Versus Wages with Envy and Pride," Levine's Working Paper Archive 786969000000000336, David K. Levine.
  15. Robert Dur & Jan Tichem, 2012. "Social Relations and Relational Incentives," CESifo Working Paper Series 3826, CESifo Group Munich.

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