Turning relative deprivation into a performance incentive device

Oded Stark and Grzegorz Kosiorowski

No 142, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics

Abstract: The inclination of individuals to improve their performance when it lags behind that of others with whom they naturally compare themselves can be harnessed to optimize the individuals' effort in work and study. In a given set of individuals, we characterize each individual by his relative deprivation, which measures by how much the individual trails behind other individuals in the set doing better than him. We seek to divide the set into an exogenously predetermined number of groups (subsets) in order to maximize aggregate relative deprivation, so as to ensure that the incentive for the individuals to work or study harder because of unfavorable comparison with others is at its strongest. We find that the solution to this problem depends only on the individuals' ordinally-measured levels of performance independent of the performance of comparators.

Keywords: Social preferences; Relative deprivation; Effort elicitation; Assignment to groups; Performance optimization (search for similar items in EconPapers)
JEL-codes: D01 D02 D23 D61 D90 L22 M11 M52 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-mic
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Related works:
Journal Article: Turning relative deprivation into a performance incentive device (2021)
Working Paper: Turning Relative Deprivation into a Performance Incentive Device (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:142

DOI: 10.15496/publikation-53122

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