CFDP 1537

Prizes versus Wages with Envy and Pride

Author(s): 

Publication Date: October 2005

Pages: 25

Abstract: 

We show that if agents are risk neutral, prizes outperform wages when there is sufficient pride and envy relative to the noisiness of performance. If agents are risk averse, prizes are a necessary supplement to wages (as bonuses).

Keywords: 

Envy, Pride, Wages, Prizes, Bonus

JEL Classification Codes:  C72, D01, D23, L14

See CFP: 1367