Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93984
Authors: 
Bartling, Björn
von Siemens, Ferdinand
Year of Publication: 
2007
Series/Report no.: 
SFB/TR 15 Discussion Paper 217
Abstract: 
Partnerships are the prevalent organizational form in many industries. Most partnerships share profits equally among the partners. Following Kandel and Lazear (1992) it is often argued that peer pressure mitigates the arising free-rider problem. This line of reasoning takes the equal sharing rule as exogenously given. The purpose of our paper is to show that with inequity averse partners - a behavioral assumption akin to peer pressure - the equal sharing rule arises endogenously as an optimal solution to the incentive problem in a partnership.
Subjects: 
equal sharing rule
partnerships
incentives
peer pressure
inequity aversion
JEL: 
D20
D86
J54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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