Dhillon, Amrita and Hertzog-Stein, Alexander (2006) Games of status and discriminatory contracts. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.759).

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Abstract

Following recent empirical evidence which indicates the importance of rank for the determination of workers’ wellbeing, this paper introduces status seeking preferences in the form of rank-dependent utility functions into a moral hazard framework with one firm and multiple workers, but no correlation in production. Workers’ concern for the rank of their wage in the firm’s wage distribution may induce the firm to offer discriminatory wage contracts when its aim is to induce all workers to expend effort.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HM Sociology
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Social status, Employee competitive behavior, Labor laws and legislation, Wages -- Mathematical models, Utility theory -- Mathematical models, Game theory
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Official Date:	16 April 2006
Dates:	Date Event 16 April 2006 Published
Number:	No.759
Number of Pages:	46
Institution:	University of Warwick
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access (Creative Commons)
Funder:	Economic and Social Research Council (Great Britain) (ESRC), University of Warwick

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