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Social Preferences and the Distribution of Rewards

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  • Raphael Soubeyran

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Nicolas Quérou

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Mamadou Gueye

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

Motivated by the potential tension between coordination, which may require discriminating between identical agents, and social comparisons, which may call for small pay differentials, we analyze the optimal reward scheme in an organization involving agents with social preferences whose tasks are complementary. Although a tension exists between the effects of inequality aversion and altruism, there is always more reward inequality when agents are inequality-averse and altruistic than when they are purely self-interested. We then highlight how our results differ when agents are not altruistic but rather inequality-averse a la Fehr and Schmidt (1999)..

Suggested Citation

  • Raphael Soubeyran & Nicolas Quérou & Mamadou Gueye, 2022. "Social Preferences and the Distribution of Rewards," CEE-M Working Papers hal-03707471, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    • Handle: RePEc:hal:wpceem:hal-03707471
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-03707471v1
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    Keywords

    incentives; coordination; principal; agents; social comparisons;
    All these keywords.

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