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Equal Pay for Unequal Work: Limiting Sabotage in Teams
Author(s) -
Bose Arup,
Pal Debashis,
Sappington David E. M.
Publication year - 2010
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2009.00244.x
Subject(s) - incentive , limiting , order (exchange) , work (physics) , pareto principle , value (mathematics) , business , team composition , microeconomics , economics , computer science , knowledge management , operations management , engineering , finance , mechanical engineering , machine learning
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.