Present-biased preferences and optimal compensation schedules: a note


This paper presents a very simple model with present biased agents where optimal compensation schedules may be back-loaded, which is a characteristics of wage contracts we often observe in reality. There is large evidence that workers are often paid less than their marginal productivity early in their careers, and more than their marginal productivity later. In this model, back-loaded wage schedules emerge as a commitment device that allows to prevent sub-optimal consumption and labor supply patterns

Similar works

Full text


Munich RePEc Personal Archive

Provided a free PDF
oai::64818Last time updated on 7/9/2019View original full text link

This paper was published in Munich RePEc Personal Archive.

Having an issue?

Is data on this page outdated, violates copyrights or anything else? Report the problem now and we will take corresponding actions after reviewing your request.