Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104172
Authors: 
Siemens, Ferdinand von
Year of Publication: 
2005
Series/Report no.: 
Munich Discussion Paper 2005-14
Abstract: 
This paper considers a firm whose potential employees have private information on both their productivity and the extent of their fairness concerns. Fairness is modelled as inequity aversion, where fair-minded workers suffer if their colleagues get more income net of production costs. Screening workers with equal productivity but different fairness concerns is shown to be impossible if both types are to be employed, thereby rendering the optimal employment contracts discontinuous in the fraction of fair-minded workers. As a result, fairness might infuence the employment contracts of all workers although only some are fair-minded, and identical firms facing very similar pools of workers might employ very different remuneration schemes.
Subjects: 
Fairness
Employment Contracts
Adverse Selection
Screening
Heterogeneity in Organizational Form
JEL: 
C70
D21
D42
D63
D82
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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