Document Type
Discussion Paper
Publication Date
7-1-2014
CFDP Number
1954R2
CFDP Revision Date
2017-02-01
CFDP Pages
54
Abstract
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 to get her employees to work hard for the least total cost. We find that she should motivate workers of low skill mostly by status and high skill mostly by money. Moreover, she should do so by using a small number of titles and wage levels. This often results in star wages to the elite performers and, more generally, in wage jumps for small increases in productivity. By analogy, the governance of a society should pay special attention to the status concerns of ordinary citizens, which may often be accomplished by reinforcing suitable social norms.
Recommended Citation
Dubey, Pradeep and Geanakoplos, John, "Money and Status: How Best to Incentivize Work" (2014). Cowles Foundation Discussion Papers. 2360.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2360