Status is greatly valued in the real world, yet it has not received much attention from economic theorists. We examine how the owner of a ﬁrm can best combine money and status together to get his employees to work hard for the least total cost. We ﬁnd that he should motivate workers of low skill mostly by status and high skill mostly by money. Moreover, he should do so by using a small number of titles and wage levels. This often results in star wages to the elite performers.
Dubey, Pradeep and Geanakoplos, John, "Games with Money and Status: How Best to Incentivize Work" (2014). Cowles Foundation Discussion Papers. 2358.