Inequity Aversion in Tournaments

CIRPEE Working Paper 03-22

24 Pages Posted: 17 Jun 2003

See all articles by Dominique Demougin

Dominique Demougin

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Governance & Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Claude Fluet

Université Laval

Date Written: April 2003

Abstract

We consider the cost of providing incentives using tournaments when workers are inequity averse and performance evaluation is costly. The principal never benefits from empathy to align incentives in a moral hazard framework between the workers, but he may benefit from their propensity for envy depending on the costs of assessing performance. More envious employees are preferred when the costs are high, less envious ones when they are low.

Keywords: Tournaments, inequity aversion, envy, incentives, performance

JEL Classification: D8, J4

Suggested Citation

Demougin, Dominique and Fluet, Claude-Denys, Inequity Aversion in Tournaments (April 2003). CIRPEE Working Paper 03-22, Available at SSRN: https://ssrn.com/abstract=409560 or http://dx.doi.org/10.2139/ssrn.409560

Dominique Demougin (Contact Author)

EBS Universität für Wirtschaft und Recht - EBS Business School - Department of Governance & Economics ( email )

International University Schloss Reichartshausen
Campus Wiesbaden, Soehnleinstrasse 8A
Wiesbaden, 65201
Germany

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Muenchen, 81679
Germany

Claude-Denys Fluet

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada
1-418-656-2131, ext 3290 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
317
Abstract Views
3,159
rank
134,739
PlumX Metrics