Host: The Japan Society for Management Information
This essay analyzes wage-setting system in the use of implementation theory, in particular, sub-game perfect equilibrium (SPE) implementation. This essay focuses on the transition from "hourly-paid wage setting system", in which over time premium is paid based on the overtime working hour, to "performance-based payment system" such as white-collar exemption system. Precisely, the essay analyze whether the said transition can be selected as a reasonable decision for both employers and workers, in other word, the outcome of the choice correspondence, which require better outcome for both, can be included in the set of solution of SPE. If so, the essay identifies the conditions of "environment" of wage setting which is required for the model to be SPE "implementable".
