Worker compensation schemes and product market competition

Arbeitspapier

We analyze product market competition between firm owners where the risk-neutral workers decide on their efforts and, thereby, on the output levels. Various worker compensation schemes are compared: a piece-rate compensation scheme as a benchmark when workers' output performance is verifiable, and a contest-based as well as a tournament-based compensation scheme when it is only verifiable who the best performing worker is. According to optimal designs, all the considered compensation contracts lead to an equal market outcome. Therefore, it depends decisively on the relative costs of organizing a monitoring device, a contest, or a tournament whether the one or the other compensation scheme should be implemented.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: University of Tübingen Working Papers in Business and Economics ; No. 128

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Firm Organization and Market Structure ; Personnel Economics: Compensation and Compensation Methods and Their Effects
• Subject: worker compensation schemes ; piece rates ; contests ; tournaments ; product market competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stadler, Manfred
• Event: Veröffentlichung
• (who): University of Tübingen, Faculty of Economics and Social Sciences
• (where): Tübingen
• (when): 2020

Further information

• DOI: doi:10.15496/publikation-38665
• Handle: http://hdl.handle.net/10419/213438
• URN: urn:nbn:de:bsz:21-dspace-972820
• Last update: 10.03.2025, 11:44 AM CET