CFDP 1835

Prizes versus Wages with Envy and Pride


Publication Date: November 2011

Pages: 26


We show that if agents are risk neutral, prizes outperform wages if and only if 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).


Envy, Pride, Wages, Prizes, Bonus

JEL Classification Codes: C72, D01, D23, L14

See CFP: 1367