"Endogenous" Relative Concerns: The Impact of Workers' Characteristics on Status and Pro ts in the Firm

Abhijit Ramalingam

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores the rationality of status concerns amongst co-workers and the impact of such rational status concerns on a firm's profits. We find that it is individually rational for agents in a firm to develop and exhibit status concerns. Workers are, by their choices of status concerns, able to transfer surplus from the the rm to themselves. Further, relative concerns are shaped by the relative strengths and weaknesses of the workers in the firm. Finally, a firm's profit is reduced (relative to the benchmark moral-hazard model) by workers who exhibit such "endogenous" relative concerns.

Keywords: status; incentives; endogenous preferences; surplus transfer; profits (search for similar items in EconPapers)
JEL-codes: D86 L14 M51 M52 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-cwa
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18759

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