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SUMMARY:Relative Pay for Non-Relative Performance: Keeping up with the Jon
 eses with Optimal Contracts
DTSTART:20190412T140000
DTEND:20190412T153000
DTSTAMP:20260416T193033Z
UID:52807dd5d0ef29e6e49cdcfdf302300a9db5023005bd49126af8d1cc
CATEGORIES:Conferences - Seminars
DESCRIPTION:Ron KANIEL\, Simon School of Business\, University of Rocheste
 r\nWe consider multi-agent contracting when agents have “keeping up with
  the Joneses” (KUJ) preferences. Although contracts appear inefficient\,
  as performance seems inadequately benchmarked\, when a single principal c
 an commit to a public contract\, the optimal contract hedges agents’ rel
 ative wage risk without sacrificing efficiency. With multiple principals\,
  or a principal that is unable to commit\, a “rat race” emerges in whi
 ch agents are more productive\, but wages increase even more\, reducing pr
 ofits and undermining efficiency. Renegotiation reduces or enhances effici
 ency depending on whether KUJ effects are weak or strong. Public disclosur
 e of contracts across firms can cause output to collapse.
LOCATION:Unil\, Internef building\, room 275
STATUS:CONFIRMED
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