Games of status and discriminatory contracts
AbstractFollowing recent empirical evidence which indicates the importance of rank for the determination of workers' wellbeing, this paper introduces status seeking preferences in the form of rank-dependent utility functions into a moral-hazard framework with one firm and multiple workers, but no correlation in production. We show that workers' concern for the rank of their wage in the firm's wage distribution induces the firm to offer discriminatory wage contracts when its aim is to induce all workers to expend effort.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 65 (2009)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622836
Status-seeking Incentives Moral hazard Asymmetric contracts;
Other versions of this item:
- Dhillon, Amrita & Herzog-Stein, Alexander, 2006. "Games of Status and Discrininatory Contract," The Warwick Economics Research Paper Series (TWERPS) 759, University of Warwick, Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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