Equal Pay for Unequal Work: Limiting Sabotage in Teams

Debashis Pal (), Arup Bose and David Sappington

University of Cincinnati, Economics Working Papers Series from University of Cincinnati, Department of Economics

Abstract: We demonstrate the value of equal pay policies in teams, even when team members have distinct abilities and make different contributions to team performance. A commitment to compensate all team members in identical fashion eliminates the incentive that each team member otherwise has to sabotage the activities of teammates in order to induce the team owner to implement a more favorable reward structure. The reduced sabotage benefits the team owner, and can secure Pareto gains under plausible circumstances.

Pages: 20 pages
Date: 2008
New Economics Papers: this item is included in nep-bec, nep-lab and nep-spo
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http://www.artsci.uc.edu/collegedepts/economics/research/docs/Wppdf/2008-07.pdf (application/pdf)

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Journal Article: Equal Pay for Unequal Work: Limiting Sabotage in Teams (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cin:ucecwp:2008-07

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