Optimal incentive contracts under inequity aversion

Arbeitspapier

We analyze the Moral Hazard problem, assuming that agents are inequity averse. Our results differ from conventional contract theory and are more in line with empirical findings than standard results. We find: First, inequity aversion alters the structure of optimal contracts. Second, there is a strong tendency towards linear sharing rules. Third, it delivers a simple rationale for team based incentives in many environments. Fourth, the Sufficient Statistics Result is violated. Dependent on the environment, optimal contracts may be either overdetermined or incomplete.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: IZA Discussion Papers ; No. 1643

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Wage Level and Structure; Wage Differentials ; Compensation Packages; Payment Methods ; Personnel Management; Executives; Executive Compensation ; Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
• Thema: contract theory ; linear contracts ; incentives ; sufficient statistics result ; inequity aversion ; incomplete contracts

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Englmaier, Florian ; Wambach, Achim
• Ereignis: Veröffentlichung
• (wer): Institute for the Study of Labor (IZA)
• (wo): Bonn
• (wann): 2005

Weitere Informationen

• Handle: http://hdl.handle.net/10419/33291
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ