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Social Preferences and the Distribution of Rewards

Raphael Soubeyran, Nicolas Querou and Mamadou Gueye (mamadou.gueye@dauphine.psl.eu)
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Mamadou Gueye: LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

CEE-M Working Papers from CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro

Abstract: Motivated by the potential tension between coordination, which may require discriminating between identical agents, and social comparisons, which may call for small pay differentials, we analyze the optimal reward scheme in an organization involving agents with social preferences whose tasks are complementary. Although a tension exists between the effects of inequality aversion and altruism, there is always more reward inequality when agents are inequality-averse and altruistic than when they are purely self-interested. We then highlight how our results differ when agents are not altruistic but rather inequality-averse a la Fehr and Schmidt (1999)..

Keywords: incentives; coordination; principal; agents; social comparisons (search for similar items in EconPapers)
Date: 2022-06-28
New Economics Papers: this item is included in nep-hrm and nep-mic
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