This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

When the Talented Should Receive Weaker Incentives: Peer Pressure in Teams

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Burkhard Hehenkamp
Oddvar Kaarbøe

Additional information is available for the following registered author(s):

Abstract

We study optimal incentive contracts in teams which consist of two groups of agents differing in their productivity and where team members feel a social pressure to exert similar effort. We show that it is first-best optimal to induce the more productive agent to exert higher effort. We then characterize the equilibrium under agency. It turns out that the principal always chooses to give the less productive agents the strongest incentives. Furthermore, we show that the principal is able to implement the unique first-best solution. In this solution less productive agents exert less effort, and all agents experience peer pressure.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.wiso.uni-dortmund.de/mik/de/content/forschung/DPSeries/PDF/04-02.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by University of Dortmund, Department of Economics in its series Discussion Papers in Economics with number 04_02.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 26 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:mik:wpaper:04_02

Contact details of provider:
Postal: Vogelpothsweg 87, D-44227 Dortmund
Phone: +49 +231 755 3182
Fax: +49 +231 755 4375
Web page: http://www.wiso.uni-dortmund.de/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Eva Borchard) The email address of this maintainer does not seem to be valid anymore. Please ask Eva Borchard to update the entry or send us the correct address..

Related research
Keywords:

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Armin Falk & Andrea Ichino, 2004. "Clean Evidence on Peer Effects," Levine's Bibliography 666156000000000439, UCLA Department of Economics. [Downloadable!]
    Other versions:
  2. S. Huck & D. Kübler & J. Weibull, . "Social norms and optimal incentives in firms," Sonderforschungsbereich 373 2002-11, Humboldt Universitaet Berlin.
    Other versions:
  3. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 285-300, Summer.
  4. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August. [Downloadable!] (restricted)
    Other versions:
  5. William E. Encinosa III & Martin Gaynor & James B. Rebitzer, 1997. "The Sociology of Groups and the Economics of Incentives: Theory and Evidence on Compensation Systems," NBER Working Papers 5953, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-54, April. [Downloadable!] (restricted)
  7. Kohei Daido, 2002. "The Effects of Peer Pressure and Risk Sharing on Incentives," Discussion Papers in Economics and Business 02-14-Rev, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Aug 2003.
  8. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  9. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, Department of Economics, University of Bristol, UK. [Downloadable!]
  10. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August. [Downloadable!] (restricted)
  11. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? IDEAS was launched in September 1997.

This page was last updated on 2009-12-2.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.