Fairness, envy, guilt and greed: building equity considerations into agency theory

Alexander Pepper, Tom Gosling, Julie Gore

Research output: Contribution to journalArticle

13 Citations (Scopus)

Abstract

In this paper we examine the extent to which fairness considerations are salient to senior executives and consider the implications for agency theory, tournament theory, and the design of top-management incentives. We look for patterns in a unique data set of senior executive preferences and seek explanations for these patterns using a model of fairness first advanced by Fehr & Schmidt (1999). We propose a number of amendments to Fehr & Schmidt’s model. We challenge some of the standard tenets of agency theory and tournament theory, demonstrating why equity considerations should be taken into account. We add to the growing literature on behavioural agency theory.
Original languageEnglish
Pages (from-to)1291-1314
Number of pages24
JournalHuman Relations
Volume68
Issue number8
Early online date17 Mar 2015
DOIs
Publication statusPublished - 1 Aug 2015

Keywords

  • agency theory
  • executive pay
  • fairness
  • tournament theory

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