Team Incentives under Moral and Altruistic Preferences: Which Team to Choose?

Roberto Sarkisian

No 17-838, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper studies incentives provision when agents are characterized either by homo moralis preferences (Alger and Weibull, 2013, 2016), i.e. their utility is represented by a convex combination of selfish preferences and Kantian morality, or by altruism. In a moral hazard in teams setting with two agents whose efforts affect output stochastically, I demonstrate that the power of extrinsic incentives decreases with the degrees of morality and altruism displayed by the agents, thus leading to increased profits for the principal. I also show that a team of moral agents will only be preferred if the production technology exhibits decreasing returns to efforts, the probability of a high realization of output conditional on both agents exerting effort is suficiently high and either the outside option for the agents is zero or the degree of morality is suficiently low.

Keywords: Moral hazard in teams; optimal contracts; homo moralis preferences; altruism (search for similar items in EconPapers)
JEL-codes: D03 D82 D86 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:31966

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