Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics

Johannes Abeler, Steffen Altmann, Sebastian Goerg, Sebastian Kube and Matthias Wibral ()
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Matthias Wibral: Maastricht University

No 5727, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we discuss recent evidence from economic experiments that study the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments: individual pay-for-performance schemes maximize efficiency but might lead to inequitable outcomes. We present findings from laboratory experiments that show under which circumstances partially incomplete contracts can create equitable work environments while at the same time reaching surprisingly efficient outcomes.

Keywords: laboratory experiments; wage setting; equity; gift exchange; reciprocity; incomplete contracts; incentives; organizational economics (search for similar items in EconPapers)
JEL-codes: C92 D63 J33 J41 M52 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2011-05
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Analyse & Kritik, 2011, 33(1), 325-347

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