Research Seminar Microeconomics“Self-Managed Work Teams: An Efficiency Rationale for Pay-Compression”Marc Möller (U Bern)
28 June 2018
The Microeconomics Research Seminar welcomes Marc Möller (U Bern), who will present his work on
“Self-Managed Work Teams: An Efficiency Rationale for Pay-Compression”.
Place: Room 0029, Von-Melle-Park 5
Hour: 17:15 - 18:45
We are looking forward to seeing you there!
Abstract
This paper provides a rationale for equal revenue-sharing in heterogeneous partnerships. Our argument is based on a standard team production model preceded by a project selection stage. The allocation of revenue influences not only the partners' incentives to provide effort (motivation) but also their propensity to share and hence employ private information about alternative projects' qualities (adaptation). The revenue-sharing rule that is optimal for motivation is diametrically opposed to the one that is optimal for adaptation. Equal revenue-sharing strikes a balance between these two objectives and can be efficient even in the presence of considerable productivity differences across partners.