Efficient Inequity–Averse Teams

Li, Jianpei (May 2007): Efficient Inequity–Averse Teams. SFB/TR 15 Discussion Paper No. 210

Abstract

This paper analyzes the efficiency of team production when agents exhibit other regarding preferences. It is shown that full efficiency can be sustained as an equilibrium through a budget-balancing mechanism that punishes some randomly chosen agents if output falls short of efficient level but distributes the output equally otherwise, provided that the agents are sufficiently inequity averse.

• Item Type: Paper (Discussion Paper)
• Keywords: moral hazard, team production, inequity aversion
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A7 - Auktionen, Anreizprobleme und Wettbewerb
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: C7, D7, D63, L2
• Language: English