Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts

Sabrina Teyssier

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Abstract: This paper reports on the results of an experiment testing whether the agents selfselect between a competitive payment scheme and a revenue-sharing scheme depending on their inequity aversion. Average efficiency should be increased when these payment schemes are endogenously chosen by agents. We show that the choice of the competition is negatively affected by disadvantageous inequity aversion and risk aversion. In the second half of the experiment, the effect of individual preferences is indirect through the effect of past results. The self-selection of agents increases the efficiency of the competitive scheme but not that of the revenue-sharing scheme, due to a heterogeneity of behaviors.

Keywords: revenue-sharing scheme; performance pay; incentives; self-selection; inequity aversion; competition (search for similar items in EconPapers)
Date: 2008
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00303727
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Citations: View citations in EconPapers (19)

Published in 2008

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Working Paper: Experimental Evidence on Inequity Aversion and Self-Selection between Incentive Contracts (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00303727

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