The optimal reporting frequency is an important issue in accounting. In many production settings, substitution effects across periods occur. This paper shows that the optimal reporting frequency depends on the strength of the substitution effect and on the information content of performance...

Social preferences explain competitive behavior between agents and reciprocity towards a principal but there is no insight into the interaction of competition and reciprocity. We conducted a laboratory experiment with two treatments to address this issue. In a conventional tournament, an agent...

This paper introduces and discusses an idea which minimizes gaming or manipulation activities, if payments are linked to results from manipulative methods. The idea is to add nonmanipulable information to manipulable information to improve the evaluation of a given output. A score declining in...

This paper considers job separations in a search model with labour market matching and moral hazard. Both workers and firms value productive matches and take actions to increase match stability: firms offer a share of match surplus to provide workers with correct incentives and workers take...

Modern societies are characterized by competing organizations that rely predominantly on incentive schemes to align the behavior of their members with the organizations’ objectives. This study contributes to explaining why in so many cases incentive schemes have gradually crowded out...

We analyze a dynamic moral-hazard model to derive optimal sales force compensation plans without imposing any ad hoc restrictions on the class of feasible incentive contracts. We explain when the compensation plans that are most common in practice - fixed salaries, quota-based bonuses,...

We analyze the effects of wage floors on optimal job design in a moral-hazard model with asymmetric tasks and imperfect aggregate performance measurement. Due to cost advantages of specialization, assigning the tasks to different agents is efficient. A sufficiently high wage floor, however,...

In many groups heterogeneous incentives induce people to make unequal contributions to a common pool. This paper studies whether people consider the random assignment of such unequal incentives as unequal opportunities and demand more egalitarian distributions of the pool. The aggregate...

The current study integrates the repeated game approach to implicit contracts and the analysis of explicit bonus rules based on subjective performance evaluation to determine the optimal structure of the compensation scheme for the average white- collar employee. In contrast to previous...