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).Envy, Pride, Wages, Prizes, Bonus

John Geanakoplos

Ori Haimanko

Pradeep K. Dubey

English

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Prizes versus Wages with Envy and Pride

http://cowles.econ.yale.edu/P/cd/d15a/d1537.pdf

Prizes versus Wages with Envy and Pride

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Research Papers in Economics