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Masters Thesis - Schumacher.pdf (1.44 MB)

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Inequity-Averse Preferences in the Principal-Agent Framework

Schumacher, Tyler R
http://rave.ohiolink.edu/etdc/view?acc_num=miami153299521737861

Abstract Details

2018, Master of Arts, Miami University, Economics.
We examine a contracting relationship in the principal-agent framework with groupings of one principal and two agents, particularly employing the Fehr-Schmidt functional form to allow for inequity aversion. When imposing that there is no guilt parameter, ß, we find significant evidence that the envy parameter (a) is statistically different from zero when we allow agents to reference other agents for payoff comparisons, but we find that the envy parameter is not significantly different from zero when allowing for an agent to reference the principal in payoff comparisons. These results are suggestive of a phenomenon wherein those under a contract relationship make “horizontal” payoff comparisons and are motivated to minimize inequity with respect to those in similar roles, but do not show such motivation when comparing “vertically” to those in roles different from them. If our results are indeed robust, this behavioral phenomenon could have implications on the nature of trends in wage dispersion explained at the level of motivation within individual contract negotiations.
Jacob Brindley, PhD (Advisor)
Michael Lipsitz, PhD (Committee Member)
Steven Elliott, PhD (Committee Member)
42 p.
Behaviorial Sciences; Economics; Experiments
Inequity aversion; experiments; economics; behavioral economics; maximum likelihood estimation; quantal response equilibrium; MLE; QRE

Recommended Citations

Citations

  • Schumacher, T. R. (2018). Inequity-Averse Preferences in the Principal-Agent Framework [Master's thesis, Miami University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=miami153299521737861

    APA Style (7th edition)

  • Schumacher, Tyler. Inequity-Averse Preferences in the Principal-Agent Framework. 2018. Miami University, Master's thesis. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=miami153299521737861.

    MLA Style (8th edition)

  • Schumacher, Tyler. "Inequity-Averse Preferences in the Principal-Agent Framework." Master's thesis, Miami University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=miami153299521737861

    Chicago Manual of Style (17th edition)

miami153299521737861
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This open access ETD is published by Miami University and OhioLINK.