Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts

Sabrina Teyssier

No 821, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: This paper reports on the results of an experiment testing whether the agents selfselect between a competitive payment scheme and a revenue-sharing scheme depending on their inequity aversion. Average efficiency should be increased when these payment schemes are endogenously chosen by agents. We show that the choice of the competition is negatively affected by disadvantageous inequity aversion and risk aversion. In the second half of the experiment, the effect of individual preferences is indirect through the effect of past results. The self-selection of agents increases the efficiency of the competitive scheme but not that of the revenue-sharing scheme, due to a heterogeneity of behaviors.

Keywords: performance pay; incentives; self-selection; inequity aversion; competition; revenue-sharing scheme (search for similar items in EconPapers)
JEL-codes: C92 D63 J31 J33 M52 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008
New Economics Papers: this item is included in nep-cta, nep-exp and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
ftp://ftp.gate.cnrs.fr/RePEc/2008/0821.pdf (application/pdf)

Related works:
Working Paper: Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:0821

Access Statistics for this paper

More papers in Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon Contact information at EDIRC.
Bibliographic data for series maintained by Nelly Wirth ( this e-mail address is bad, please contact ).