Subjective Evaluations: Discretionary Bonuses and Feedback Credibility

We provide a new rationale for the use of discretionary bonuses. In a setting with unknown match qualities between a worker and a firm and subjective evaluations by the principal, bonuses are useful in order to make the feedback from the firm to the workers credible. This way workers in good matches are less inclined to accept outside offers.

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Year of publication:	2013
Authors:	Fuchs, William
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	discretionary bonuses \| feedback \| signalling

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Series:	IZA Discussion Papers ; 7758
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	774699434 [GVK] hdl:10419/90004 [Handle] RePEc:iza:izadps:dp7758 [RePEc]
Classification:	D82 - Asymmetric and Private Information ; D83 - Search, Learning, Information and Knowledge ; D86 - Economics of Contract: Theory ; M5 - Personnel Economics
Source:	EconStor

Persistent link: https://www.econbiz.de/10010329084