Turning Relative Deprivation into a Performance Incentive Device

Oded Stark and Grzegorz Kosiorowski
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Grzegorz Kosiorowski: Cracow University of Economics

No 14050, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The inclination of individuals to improve their performance when it lags behind that of others with whom they naturally compare themselves can be harnessed to optimize the individuals' effort in work and study. In a given set of individuals, we characterize each individual by his relative deprivation, which measures by how much the individual trails behind other individuals in the set doing better than him. We seek to divide the set into an exogenously predetermined number of groups (subsets) in order to maximize aggregate relative deprivation, so as to ensure that the incentive for the individuals to work or study harder because of unfavorable comparison with others is at its strongest. We find that the solution to this problem depends only on the individuals' ordinally-measured levels of performance independent of the performance of comparators.

Keywords: effort elicitation; assignment to groups; performance optimization; relative deprivation; social preferences (search for similar items in EconPapers)
JEL-codes: D01 D02 D23 D61 D90 L22 M11 M52 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2021-01
New Economics Papers: this item is included in nep-mic
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Published - published in: Journal of Mathematical Sociology, 2021, 45 (1), 22-36

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Related works:
Journal Article: Turning relative deprivation into a performance incentive device (2021)
Working Paper: Turning relative deprivation into a performance incentive device (2021)
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