Equal Sharing Rules in Partnerships

Bartling, Björn und Siemens, Ferdinand von (September 2007): Equal Sharing Rules in Partnerships. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2007-29

Abstract

Partnerships are the prevalent organizational form in many industries. Most partnerships share profits equally among the partners. Following Kandel and Lazear (1992) it is often argued that ``peer pressure'' mitigates the arising free-rider problem. This line of reasoning takes the equal sharing rule as exogenously given. The purpose of our paper is to show that with inequity averse partners - a behavioral assumption akin to peer pressure - the equal sharing rule arises endogenously as an optimal solution to the incentive problem in a partnership.

• Dokumententyp: Paper
• Keywords: equal sharing rule, partnerships, incentives, peer pressure, inequity aversion
• Fakultät: Volkswirtschaft ; Volkswirtschaft > Munich Discussion Papers in Economics ; Volkswirtschaft > Munich Discussion Papers in Economics > Mikroökonomik
• Themengebiete: 300 Sozialwissenschaften > 300 Sozialwissenschaft, Soziologie ; 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: D20, D86, J54
• Sprache: Englisch