Prizes versus Wages with Envy and Pride
We show that if agents are risk neutral, prizes outperform wages when there is suﬀicient pride and envy relative to the noisiness of performance. If agents are risk averse, prizes are a necessary supplement to wages (as bonuses).
Dubey, Pradeep; Geanakoplos, John; and Haimanko, Ori, "Prizes versus Wages with Envy and Pride" (2005). Cowles Foundation Discussion Papers. 1824.