Equality versus equity bases pay systems and their effects on rational altruism motivation in teams: wicked masked altruism
AbstractThis paper analyses the design of optimal incentives in teams both with and without rational altruism. The main contribution of the paper is to study the influence of the incentive function on the altruism parameter chosen by team members. We find that optimal incentive is independent of the presence of rational altruism. Secondly, we compare the welfare loss of equal sharing rules versus second best optimal sharing rules (based on equity). Finally, we distinguish between two sources of rational altruism: 1) the strategic component, and 2) an additional component that reflects wicked behavior by some agents, reducing the firm’s efficiency.
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Bibliographic InfoPaper provided by Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza in its series Documentos de Trabajo with number dt2007-04.
Date of creation: Apr 2007
Date of revision:
Rational Altruism; incentives in teams; equity based pay system; wicked masked altruism;
Find related papers by JEL classification:
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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