
Abstract
This paper considers a firm whose potential employees have private information on both their productivity and the extent of their fairness concerns. Fairness is modelled as inequity aversion, where fair-minded workers suffer if their colleagues get more income net of production costs. Screening workers with equal productivity but different fairness concerns is shown to be impossible if both types are to be employed, thereby rendering the optimal employment contracts discontinuous in the fraction of fair-minded workers. As a result, fairness might influence the employment contracts of all workers although only some are fair-minded, and identical firms facing very similar pools of workers might employ very different remuneration schemes.
Item Type: | Paper |
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Keywords: | Fairness, Employment Contracts, Adverse Selection, Screening, Heterogeneity in Organizational Form |
Faculties: | 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 > A4 - Unvollständige Verträge, Marktinteraktion und soziale Vergleichsprozesse |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | C70, D21, D42, D63, D82, J31 |
URN: | urn:nbn:de:bvb:19-epub-13492-6 |
Language: | English |
Item ID: | 13492 |
Date Deposited: | 10. Jul 2012, 13:11 |
Last Modified: | 04. Nov 2020, 12:53 |