It is well known that profit sharing arrangements Pareto-dominate fixed wage contracts. Share agreements are (far) less than ubiquitous, however. This paper offers a solution of this "fixed wage puzzle" by adopting a perspective of bounded rationality. We show that share arrangements that...

It is well known that profit sharing arrangements Pareto-dominate fixed wage contracts. Share agreements are (far) less than ubiquitous, however. This paper offers a solution of this 'fixed wage' by adopting a perspective of bounded rationality. We show that share arrangements that fulfill...