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Organizational power: Should remuneration heterogeneity mirror hierarchy?

Philipp E. Otto () and Friedel Bolle
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Philipp E. Otto: European University Viadrina

Review of Economic Design, 2016, vol. 20, issue 3, No 2, 187-205

Abstract: Abstract We model and experimentally investigate effort levels in team production as a public good game with heterogeneous remuneration. In a hierarchically organized firm, team leaders (allocators) determine the effort levels of all team members. When the allocator receives equal payment or twice as much as the other workers, this results in the same team production, but when the allocator receives only half of what the other workers receive, team production is diminished.

Keywords: Public good participation; Hierarchical delegation; Principal-agent models; Employee contribution; Payment differentiation (search for similar items in EconPapers)
JEL-codes: J40 L11 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s10058-016-0189-x

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