Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56926
Authors: 
Montinari, Natalia
Year of Publication: 
2011
Series/Report no.: 
Jena economic research papers 2011,052
Abstract: 
Whether friendship or competitive relationships deserve to be encouraged in the workplace is not obvious a priori. In this paper we derive the conditions under which a profit-aximizing employer finds it convenient to induce a rat race among workers exhibiting horizontal reciprocity in order to obtain underpaid or unpaid extra effort. We characterize the optimal compensation scheme under both symmetric and asymmetric information about workers' actions, and we also derive conditions for our result to hold in the presence of vertical reciprocity.
Subjects: 
extra effort
horizontal reciprocity
negative reciprocity
JEL: 
D03
D83
J33
Document Type: 
Working Paper

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