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Equality versus equity bases pay systems and their effects on rational altruism motivation in teams: wicked masked altruism

Author

Listed:
  • Javier Garc�a Bernal

    (Departamento de Econom�a y Direcci�n de Empresas. Facultad de Ciencias Econ�micas y Empresariales. Universidad de Zaragoza)

  • Marisa Ram�rez Ales�n

    (Departamento de Econom�a y Direcci�n de Empresas. Facultad de Ciencias Econ�micas y Empresariales. Universidad de Zaragoza)

Abstract

This 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.

Suggested Citation

  • Javier Garc�a Bernal & Marisa Ram�rez Ales�n, 2007. "Equality versus equity bases pay systems and their effects on rational altruism motivation in teams: wicked masked altruism," Documentos de Trabajo dt2007-04, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    • Handle: RePEc:zar:wpaper:dt2007-04
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    More about this item

    Keywords

    Rational Altruism; incentives in teams; equity based pay system; wicked masked altruism;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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