Publication Date: November 2011
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