Confidence Management: On Interpersonal Comparisons in Teams

24 Pages Posted: 15 Nov 2013

See all articles by Benoît S. Y. Crutzen

Benoît S. Y. Crutzen

Erasmus University Rotterdam (EUR) - Department of Economics

Otto H. Swank

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Bauke Visser

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Date Written: Winter 2013

Abstract

Organizations differ in the degree to which they differentiate employees by ability. We analyze how the effect of differentiation on employee morale may explain this variation. We characterize sufficient conditions for the manager to refrain from differentiation. She refrains from differentiation when employees are of similar ability, especially if absolute levels are high. Avoiding differentiation boosts the self‐image of employees. To limit the negative effects of differentiation, the manager's strategy often relies on the coarsest message set possible. The likelihood that the manager differentiates depends on the presence of synergies between employees and on the convexity of the cost of effort function. Finally, we show that in the absence of commitment no differentiation is chosen too often.

Suggested Citation

Crutzen, Benoît S. Y. and Swank, Otto H. and Visser, Bauke, Confidence Management: On Interpersonal Comparisons in Teams (Winter 2013). Journal of Economics & Management Strategy, Vol. 22, Issue 4, pp. 744-767, 2013, Available at SSRN: https://ssrn.com/abstract=2354750 or http://dx.doi.org/10.1111/jems.12037

Benoît S. Y. Crutzen (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Otto H. Swank

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081448 (Phone)
+31 10 2120551 (Fax)

Bauke Visser

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+ 31 (0)10 40 81449 (81441) (Phone)
+ 31 (0)10 40 89149 (Fax)

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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