Games of status and discriminatory contracts

Amrita Dhillon () and Alexander Herzog-Stein

Games and Economic Behavior, 2009, vol. 65, issue 1, 105-123

Abstract: Following recent empirical evidence which indicates the importance of rank for the determination of workers' wellbeing, this paper introduces status seeking preferences in the form of rank-dependent utility functions into a moral-hazard framework with one firm and multiple workers, but no correlation in production. We show that workers' concern for the rank of their wage in the firm's wage distribution induces the firm to offer discriminatory wage contracts when its aim is to induce all workers to expend effort.

Keywords: Status-seeking; Incentives; Moral; hazard; Asymmetric; contracts (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Games of Status and Discriminatory Contracts (2006)
Working Paper: Games of Status and Discrininatory Contract (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:65:y:2009:i:1:p:105-123

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