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Performance Measurement, Expectancy and Agency Theory: An Experimental Study

Praag, Mirjam van; Sloof, Randolph - Institute for the Study of Labor (IZA) - 2007

Theoretical analyses of (optimal) performance measures are typically performed within the realm of the linear agency model. This model implies that, for a given compensation scheme, the agent’s optimal effort is unrelated to the amount of noise in the performance measure. In contrast,...

Persistent link: https://www.econbiz.de/10005761969

Relative Rewards within Team-Based Compensation

Irlenbusch, Bernd; Ruchala, Gabriele K. - Institute for the Study of Labor (IZA) - 2006

How to design compensation schemes to motivate team members appears to be one of the most challenging problems in the economic analysis of labour provision. We shed light on this issue by experimentally investigating team-based compensations with and without bonuses awarded to the highest...

Persistent link: https://www.econbiz.de/10005233887

How Many Winners Are Good to Have? On Tournaments with Sabotage

Harbring, Christine; Irlenbusch, Bernd - Institute for the Study of Labor (IZA) - 2005

From an employer's perspective a tournament should induce agents to exert productive activities but refrain from destructive ones. We experimentally test the predictive power of a tournament model which suggests that - within a reasonable framework - productive and destructive activities are not...

Persistent link: https://www.econbiz.de/10005762439

Incentives in Tournaments with Endogenous Prize Selection

Harbring, Christine; Irlenbusch, Bernd - Institute for the Study of Labor (IZA) - 2004

Tournament incentive schemes offer payments dependent on relative performance and thereby are intended to motivate agents to exert productive effort. Unfortunately, however, an agent may also be tempted to destroy the production of his competitors in order to improve the own relative position....

Persistent link: https://www.econbiz.de/10005566800

Relational Contracts and the Nature of Market Interactions

Brown, Martin; Falk, Armin; Fehr, Ernst - Institute for the Study of Labor (IZA) - 2003

contract enforcement. Successful long-term relations exhibit generous rent sharing and high effort (quality) from the very …

Persistent link: https://www.econbiz.de/10005703546

On Reputation: A Microfoundation of Contract Enforcement and Price Rigidity

Fehr, Ernst; Brown, Martin; Zehnder, Christian - Institute for the Study of Labor (IZA) - 2008

have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and … price rigidity. Reputation powerfully amplifies the positive effects of social preferences on contract enforcement by … increasing contract efficiency substantially. This effect is, however, associated with a considerable bilateralisation of market …

Persistent link: https://www.econbiz.de/10005822329

Relational Contracts, Taxation and the Household

Apps, Patricia; Rees, Ray - Institute for the Study of Labor (IZA) - 2009

This paper applies the theory of relational contracts to make precise the idea that because households are engaged in a repeated non-cooperative game, Pareto efficient outcomes can be supported by self interest, given the specific pattern of specialisation and exchange which exists in the...

Persistent link: https://www.econbiz.de/10004999151

Competition and Relational Contracts: The Role of Unemployment as a Disciplinary Device

Brown, Martin; Falk, Armin; Fehr, Ernst - Institute for the Study of Labor (IZA) - 2008

When unemployment prevails, relations with a particular firm are valuable for workers. As a consequence, a worker may adhere to an implicit agreement to provide high effort, even when performance is not third-party enforceable. But can implicit agreements – or relational contracts – also...

Persistent link: https://www.econbiz.de/10005703067

Do the Selfish Mimic Cooperators? Experimental Evidence from Finitely-Repeated Labor Markets

Roe, Brian E.; Wu, Steven Y. - Institute for the Study of Labor (IZA) - 2009

Experimental studies have consistently shown that cooperative outcomes can emerge even in finitely repeated games. Such outcomes are justified by existing reputation building models, which suggest that cooperative outcomes can be sustained if some subjects have other-regarding preferences. While...

Persistent link: https://www.econbiz.de/10005566817

Altruism and Relational Incentives in the Workplace

Dur, Robert; Tichem, Jan - Institute for the Study of Labor (IZA) - 2013

This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The con- tract may contain two types of incentives for...

Persistent link: https://www.econbiz.de/10010696459