Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22853
Authors: 
Grund, Christian
Sliwka, Dirk
Year of Publication: 
2002
Series/Report no.: 
Bonn econ discussion papers 2002,32
Abstract: 
Many experiments indicate that most individuals are not purely motivated by material self interest, but also care about the well being of others. In this paper we examine tournaments among inequity averse agents, who dislike disadvantageous inequity (envy) and advantageous inequity (compassion). It turns out that inequity averse agents exert higher effort levels than purely self-interested agents for a given prize structure. Contrary to standard tournament theory first-best efforts can not be implemented when prizes are endogenous. Several extensions are studied like the case of spiteful agents, sabotage, asymmetric agents and an application on the choice between vertical and lateral promotions within firms.
Subjects: 
Tournaments
Promotions
Inequity Aversion
JEL: 
M51
D63
D23
M52
Document Type: 
Working Paper

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