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Money and Status: How Best to Incentivize Work

Pradeep Dubey and John Geanakoplos ()
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John Geanakoplos: Cowles Foundation, Yale University, http://economics.yale.edu/people/john-geanakoplos

No 1954R2, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Status is greatly valued in the real world, yet it has not received much attention from economic theorists. We examine how the owner of a firm can best combine money and status to get her employees to work hard for the least total cost. We find that she should motivate workers of low skill mostly by status and high skill mostly by money. Moreover, she should do so by using a small number of titles and wage levels. This often results in star wages to the elite performers and, more generally, in wage jumps for small increases in productivity. By analogy, the governance of a society should pay special attention to the status concerns of ordinary citizens, which may often be accomplished by reinforcing suitable social norms.

Keywords: Status; Incentives; Wages (search for similar items in EconPapers)
JEL-codes: C70 I20 I30 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe, nep-hrm and nep-mic
Date: 2017-02
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