Efficiency wages and negotiated profit-sharing under uncertainty

Arbeitspapier

Efficiency wage effects of profit sharing are combined with option values related to stochastic future pofit variations. These option effects occur if the workers' profit share is fixed by long-term contracts. The Pareto-improving optimal level of the sharing ratio is calculated for two different scenarios. First, if the firm can unilaterally decide, the expected present value of net profits is maximised. Second, if the sharing ratio is based on bilateral Nash bargaining. Since a larger variation of revenues implies a higher redistribution of future profits, the inclusion of expected variations results in a lower worker's profit ratio in both scenarios.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 42

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Compensation Packages; Payment Methods
• Subject: Erfolgsbeteiligung ; Effizienzlohn ; Lohnverhandlungstheorie ; Entscheidung bei Unsicherheit ; Spieltheorie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Göcke, Matthias
• Event: Veröffentlichung
• (who): Justus-Liebig-Universität Gießen, Zentrum für Internationale Entwicklungs- und Umweltforschung (ZEU)
• (where): Giessen
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/39810
• Last update: 10.03.2025, 11:44 AM CET