Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128615
Authors: 
Kräkel, Matthias
Year of Publication: 
2014
Series/Report no.: 
Bonn Econ Discussion Papers 03/2014
Abstract: 
In a multi-agent setting, individuals often compare own performance with that of their peers. These comparisons influence agents' incentives and lead to a noncooperative game, even if the agents have to complete independent tasks. I show that depending on the interplay of the peer effects, agents' efforts are either strategic complements or strategic substitutes. I solve for the optimal monetary incentives that complement the peer effects and show that the principal prefers sequential effort choices of the agents to choosing efforts simultaneously.
Subjects: 
externalities
moral hazard
other-regarding preferences
JEL: 
C72
D03
D86
Document Type: 
Working Paper

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