Games with Money and Status: How Best to Incentivize Work

Source: Pradeep K. Dubey, John Geanakoplos, Cowles Foundation Discussion Paper No. 1954, July 14, 2014

From the abstract:
Status is greatly valued in the real world, yet it has not received much attention from economic theorists. We examine how the owner of a firm can best combine money and status together to get his employees to work hard for the least total cost. We find that he should motivate workers of low skill mostly by status and high skill mostly by money. Moreover, he should do so by using a small number of titles and wage levels. This often results in star wages to the elite performers.