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Equality versus equity bases pay systems and their effects on rational altruism motivation in teams: wicked masked altruism

Javier García Bernal () and Marisa Ramírez Alesón
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Javier García Bernal: Departamento de Economía y Dirección de Empresas. Facultad de Ciencias Económicas y Empresariales. Universidad de Zaragoza
Marisa Ramírez Alesón: Departamento de Economía y Dirección de Empresas. Facultad de Ciencias Económicas y Empresariales. Universidad de Zaragoza

Authors registered in the RePEc Author Service: Marisa Ramírez-Alesón

Documentos de Trabajo from Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza

Abstract: This paper analyses the design of optimal incentives in teams both with and without rational altruism. The main contribution of the paper is to study the influence of the incentive function on the altruism parameter chosen by team members. We find that optimal incentive is independent of the presence of rational altruism. Secondly, we compare the welfare loss of equal sharing rules versus second best optimal sharing rules (based on equity). Finally, we distinguish between two sources of rational altruism: 1) the strategic component, and 2) an additional component that reflects wicked behavior by some agents, reducing the firm’s efficiency.

Keywords: Rational Altruism; incentives in teams; equity based pay system; wicked masked altruism (search for similar items in EconPapers)
JEL-codes: D64 M21 D23 (search for similar items in EconPapers)
Date: 2007-04
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Persistent link: http://EconPapers.repec.org/RePEc:zar:wpaper:dt2007-04

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