We consider the cost of providing incentives through tournaments when workers are inequity averse and performance … envy depending on the costs of assessing performance. More envious employees are preferred when these costs are high, less …

. We offer an explanation for this observation based on envy among agents in an otherwise standard moral hazard model with …. The necessary compensation for expected envy renders incentive provision more expensive, which generates a tendency … towards flat-wage contracts. Moreover, empirical evidence suggests that social comparisons like envy are more pronounced among …

We show that if agents are risk neutral, prizes outperform wages if and only if there is sufficient pride and envy …

The two sides of envy, destructive and competitive, give rise to qualitatively different equilibria, depending on … efforts to prevent destructive envy of the relatively poor. In the opposite case, the standard "keeping up with the Joneses … nature of these equilibria leads to starkingly contrasting effects of envy on economic performance. From welfare perspective …

effectiveness of tournaments. Moreover, the data reveal that agents focus their preferences either on the principal or on the agent. …

We show that if agents are risk neutral, prizes outperform wages when there is sufficient pride and envy relative to …