Equal Pay for Unequal Work: Limiting Sabotage in Teams

29 Pages Posted: 26 Jan 2010

See all articles by Arup Bose

Arup Bose

Indian Statistical Institute, Kolkata - Statistics and Mathematics Unit

Debashis Pal

University of Cincinnati - Department of Economics

David E. M. Sappington

University of Florida - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

We demonstrate the value of “equal pay” policies in teams, even when team members have distinct abilities and make different contributions to team performance. A commitment to compensate all team members in identical fashion eliminates the incentive that each team member otherwise has to sabotage the activities of teammates in order to induce the team owner to implement a more favorable reward structure. The reduced sabotage benefits the team owner, and can secure Pareto gains under plausible circumstances.

Suggested Citation

Bose, Arup and Pal, Debashis and Sappington, David E. M., Equal Pay for Unequal Work: Limiting Sabotage in Teams. Journal of Economics & Management Strategy, Vol. 19, Issue 1, pp. 25-53, Spring 2010, Available at SSRN: https://ssrn.com/abstract=1542315 or http://dx.doi.org/10.1111/j.1530-9134.2009.00244.x

Arup Bose (Contact Author)

Indian Statistical Institute, Kolkata - Statistics and Mathematics Unit ( email )

India

Debashis Pal

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

David E. M. Sappington

University of Florida - Department of Economics ( email )

224 Matherly Hall
Gainesville, FL 32611-7140
United States
352-392-3904 (Phone)
352-336-1420 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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