We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral … hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are … incentives and become superior when there are also fair-minded players. These predictions are strongly supported by the results …

increasing costs create information asymmetry. This paper characterizes the optimal contract and helps explain the popular yet … thus far puzzling use of non-linear incentives, for example in sales-force compensation. The result is obtained by …

other words, agents are interested in their status within a group. In this work I derive the optimal linear contract in a …