We investigate the use of performance appraisal (PA) in German Firms. First, we derivehypotheses on individual and job based determinants of PA usage. Based on arepresentative German data set on individual employees, we test these hypotheses and alsoexplore the impact of PA on performance pay...

A large, mature and robust economic literature on pay for performance now exists, whichprovides a useful framework for thinking about pay for performance systems. I use thelessons of the literature to discuss how to design and implement pay for performance inpractice....

Many organizations rely on teamwork, and yet field evidence on the impacts of team-basedincentives remains scarce. Compared to individual incentives, team incentives can affectproductivity by changing both workers’ effort and team composition. We present evidencefrom a field experiment...

The Peter Principle states that, after a promotion, the observed output of promotedemployees tends to fall. Lazear (2004) models this principle as resulting from a regression tothe mean of the transitory component of ability...

This paper experimentally investigates the impact of different pay and relative performance information policies on employee effort. We explore three information policies: No feedback about relative performance, feedback given halfway through the production period, and continuously updated...

This paper develops a framework for studying individuals ideas about what constitutes justcompensation for chief executive officers (CEOs) and reports estimates of just CEO pay andthe principles guiding ideas of justice. The sample consists of students pursuing a Master ofBusiness Administration...

In this paper, we analyze a principal's optimal feedback policy in tournaments. We close agap in the literature by assuming the principal to be unable to commit to a certain policy atthe beginning of the tournament...

Although relative performance schemes are pervasive in organizations reliable empirical dataon induced sabotage behavior is almost non-existent. We study sabotage in tournaments in acontrolled laboratory experiment and are able to confirm one of the key insights from theory:effort and sabotage...