It's not at all unique, it's a mix of "efficiency wages" and tournament-based compensation. Efficiency wages just means that the pay is set higher than what it

It's not at all unique, it's a mix of "efficiency wages" and tournament-based compensation. Efficiency wages just means that the pay is set higher than what it'd take to clear the market. It means that people who'd otherwise have even better career prospects become programmers instead, people who would otherwise quit to work in a different field or for a competitor don't, and that employees generally see jobs at the current compensation level as something relatively scarce and hard to acquire in unemployment. Employers pay these efficiency wages because getting more out of their programmers is worth the extra expense, but on the flip side it means that they're more able to ask for overtime and otherwise apply stressors to employees. Lots of places have efficiency wages, and they all tend to be stressful AIUI. Oil workers are notorious for this - massive salaries for dirty, dangerous, and difficult work shifts. Tournament theory is more about how difficult it is to measure programmer productivity. So, don't even bother; instead get a sense of which programmers are doing better than the others, and make a significant portion of compensation based off "winning" this vaguely stack-rank shaped "tournament". In theory, if employees are risk-agnostic, this is as economically efficient as measuring their output and paying piece rates, but without the overhead of measuring output. In practice, this is yet more incentive for overtime, hard work, extracurriculars, networking, etc. Basically, instead of paying for the direct output of giving your job your all, they pay the best at doing that the most and let people figure out how that should translate. The stereotypical jobs for tournament theory compensation are corporate executives and professional athletes - how hard an athlete works in the gym and what statistical performance is worth what are hard questions, but "who's the best 10 players in the NBA" is a lot easier to answer. Anyhow, that's my understanding of the main factors leading to software developers being so well-compensated in the US and why there are so many unhappy and burnt-out developers. Part of the same complex IMO, it's fundamentally a result of programmer productivity being so important to businesses and yet so hard to measure. The thing I'm curious most about is how pretty much all the example jobs I gave are skewed male. It's not every male-skewed job that fits the bill, but it's still something. I'm not at all sure what, though.