Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics

Johannes Abeler, Steffen Altmann, Sebastian J. Goerg, Matthias Wibral

    Research output: Contribution to journalArticleAcademicpeer-review

    Abstract

    In this article, we discuss recent evidence from experimental economics on the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments: individual pay-for-performance wage schemes maximize of efficiency but might lead to inequitable outcomes. We present findings from laboratory experiments that show under which circumstances partially incomplete contracts can create equitable work environments while at the same time reaching surprisingly efficient outcomes.
    Original languageEnglish
    Pages (from-to)325-348
    Number of pages24
    JournalAnalyse & Kritik
    Volume33
    Issue number1
    DOIs
    Publication statusPublished - May 2011

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