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Author: | Guth, W. |
Title: | Fairness Within Firms: The Case of One Principal and Multiple Agents |
Journal: | Schmalenbach business review
2001 : APR, VOL. 53, p. 82-101 |
Index terms: | ORGANIZATIONS BUSINESS ETHICS BUSINESS GAMES |
Language: | eng |
Abstract: | Many experimental studies report evidence of fairness in bargaining games. More recently fairness and its consequences for productive efficiency have been explored in principal-agent games, in which a single principal meets a single agent. However, in most organizations, there are usually many agents in one layer of a firm's hierarchy. Consequently, fairness considerations may be based on a comparison between layers (vertical fairness) as well as within a layer (horizontal fairness). In this paper the authors report an experiment in which a principal faces two agents with deterministic but unequal productivity. When work contracts are observable, the principal offers less asymmetric contracts than when contracts are observable, i.e., horizontal fairness matters. |
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