depends on the size of the group, on the degree of overconfidence, and on the accuracy of individuals' private information …

overconfidence on the firm's optimal wage-setting policies. In our model, wage contracts both provide incentives and affect worker …-differentiation wage policy to be profit-maximizing. In numerical examples, worker overconfidence is a necessary condition for the firm to … more worker overconfidence; finally, wage compression is more likely when aggregate productivity is low. …