The Fixed Wage Puzzle: Why Profit Sharing is so Hard to Implement
Osteuropa-Institut Regensburg Wirtschaftswissenschaftliche Abteilung Working Paper No. 283
13 Pages Posted: 8 Dec 2010
Date Written: April 1, 2010
Abstract
It is well known that profit sharing arrangements Pareto-dominate fixed wage contracts. Share agreements are (far) less than ubiquitous, however. This paper offers a solution of this "fixed wage puzzle" by adopting a perspective of bounded rationality. We show that share arrangements that fulfill "plausible" constraints are not generally acceptable to both firms and unions.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
By Thomas J. Dohmen, Armin Falk, ...
-
By Thomas J. Dohmen, Armin Falk, ...
-
Eliciting Risk and Time Preferences
By Steffen Andersen, Glenn W. Harrison, ...
-
Risk Aversion, Wealth and Background Risk
By Luigi Guiso and Monica Paiella
-
Risk Aversion, Wealth and Background Risk
By Luigi Guiso and Monica Paiella
-
Are Risk Aversion and Impatience Related to Cognitive Ability?
By Thomas J. Dohmen, Armin Falk, ...
-
Are Risk Aversion and Impatience Related to Cognitive Ability?
By Thomas J. Dohmen, Armin Falk, ...
-
Are Risk Aversion and Impatience Related to Cognitive Ability?
By Thomas J. Dohmen, Armin Falk, ...