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Prizes versus Wages with Envy and Pride

Author

Listed:
  • Pradeep Dubey

    (Center for Game Theory, Department of Economics, SUNY at Stony Brook, Stony Brook, NY 11794, and Cowles Foundation for Research in Economics, Yale University, New Haven, CT 06520,USA)

  • John Geanakoplos

    (Cowles Foundation for Research in Economics, Yale University, New Haven, CT 06520, USA)

  • Ori Haimanko

    (Department of Economics, Ben-Gurion University of the Negev, Beer Sheva 84105, Israel)

Abstract

We show that if agents are risk neutral, prizes outperform wages if and only if there is sufficient pride and envy relative to the noisiness of performance. If agents are risk averse, prizes are a necessary supplement to wages (as bonuses).

Suggested Citation

  • Pradeep Dubey & John Geanakoplos & Ori Haimanko, 2011. "Prizes versus Wages with Envy and Pride," Working Papers 1101, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:1101
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    References listed on IDEAS

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    Citations

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    1. Pradeep Dubey & John Geanakoplos & Ori Haimanko, 2013. "Prizes Versus Wages With Envy And Pride," The Japanese Economic Review, Japanese Economic Association, vol. 64(1), pages 98-121, March.
    2. Koji Abe & Hajime Kobayashi & Hideo Suehiro, 2014. "Leadership in the Prisoner's Dilemma with Inequity-Averse Preferences," Discussion Papers 2014-09, Kobe University, Graduate School of Business Administration.
    3. Pradeep Dubey & John Geanakoplos, 2016. "Money and Status: How Best to Incentivize Work," Department of Economics Working Papers 16-02, Stony Brook University, Department of Economics.
    4. Pradeep Dubey & John Geanakoplos, 2014. "Games with Money and Status: How Best to Incentivize Work," Cowles Foundation Discussion Papers 1954, Cowles Foundation for Research in Economics, Yale University.
    5. Pradeep Dubey & John Geanakoplos, 2020. "Money and Status in a Meritocracy," Department of Economics Working Papers 20-09, Stony Brook University, Department of Economics.
    6. Jacqueline Volkman Wise, 2013. "Pension Portfolio Choice and Peer Envy," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(2), pages 461-489, June.

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    More about this item

    Keywords

    Envy; Pride; Wages; Prizes; Bonus;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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