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PRIZES VERSUS WAGES WITH ENVY AND PRIDE* |
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| Authors: | PRADEEP DUBEY JOHN GEANAKOPLOS ORI HAIMANKO |
| Institution: | 1. State University of New York at Stony Brook;2. Yale University;3. Ben‐Gurion University of the Negev |
| Abstract: | We show that if agents are risk‐neutral, prizes outperform wages if and only if there is sufficient pride and envy relative to the noisiness of performance. If agents are risk‐averse, prizes are a necessary supplement to wages (as bonuses). |
| Keywords: | C72 D01 D23 L14 |