The Fixed Wage Puzzle: Why Profit Sharing Is So Hard to Implement

The Fixed Wage Puzzle: Why Profit Sharing Is So Hard to Implement

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 fulfill ”...

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Veröffentlicht in:MAGKS - Joint Discussion Paper Series in Economics (Band 13-2010)
Autoren: Jerger, Jürgen, Michaelis, Jochen
Format: Arbeit
Sprache:Englisch
Veröffentlicht: Philipps-Universität Marburg 2010
Schlagworte:
Remuneration Systems
Profit Sharing
Wirtschaft
Share Economy
Economics
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Zusammenfassung: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 fulfill ”plausible“ constraints are not generally acceptableto both firms and unions.
Umfang:12 Seiten
ISSN:1867-3678
DOI:10.17192/es2024.0043

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