Review of Economic Studies Vol. 54 No. 2 1987
Incentives, Compensation, and Social Welfare
Abstract
Alternative wage structures under conditions of moral hazard are analyzed from a social-welfare standpoint. It is argued that ex post equity judgements in an uncertainty context should incorporate a preference for "positive correlation" of utilities of different individuals. In the design of compensation schemes, this may give rise to a conflict between ex post equity objectives and the need to provide effort incentives: relative performance clauses in compensation schemes that are useful for providing incentives are undesirable from an ex post equity standpoint.
- DOI
- 10.2307/2297512
- Volume
- 54
- Issue
- 2
- Pages
- 209
- Sources
- bibtex:phds-export.bib openalex crossref