Games of Status and Discriminatory Contracts

Amrita Dhillon () and Alexander Herzog-Stein

No 269652, Economic Research Papers from University of Warwick - Department of Economics

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. Workers’ concern for the rank of their wage in the firm’s wage distribution may induce the firm to offer discriminatory wage contracts when its aim is to induce all workers to expend effort.

Keywords: Financial Economics; Labor and Human Capital (search for similar items in EconPapers)
Pages: 46
Date: 2006-04-16
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Games of status and discriminatory contracts (2009)
Working Paper: Games of Status and Discrininatory Contract (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:269652

DOI: 10.22004/ag.econ.269652

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