Prizes versus Wages with Envy and Pride
Pradeep K. Dubey
SUNY Stony Brook - Center for Game Theory in Economics
Yale University - Cowles Foundation
Ben-Gurion University of the Negev - Department of Economics; Yale University - Cowles Foundation
October 17, 2005
Cowles Foundation Discussion Paper No. 1537
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).
Number of Pages in PDF File: 26
Keywords: Envy, Pride, Wages, Prizes, Bonus
JEL Classification: C72, D01, D23, L14working papers series
Date posted: October 19, 2005
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