Distributional Concerns in Managers’ Compensation Schemes for Heterogeneous Workers: Experimental Evidence

We present results from three-player experiments aimed at studying distributional concerns in how ownermanagers compensate themselves and workers of different productivities and effort costs, as well as their relations to various equity principles. We are also interested in how owner-managers decisions’ are affected by pay secrecy. We use a game in which workers first exert effort and owner-managers then decide on bonuses for themselves and...