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Income and Happiness: New Results from Generalized Threshold and Sequential Models

Boes, Stefan; Winkelmann, Rainer - Institute for the Study of Labor (IZA) - 2004

Empirical studies on the relationship between income and happiness commonly use standard ordered response models, the most well-known representatives being the ordered logit and the ordered probit. However, these models restrict the marginal probability effects by design, and therefore limit the...

Persistent link: https://www.econbiz.de/10005703632

Identity Changes and the Efficiency of Reputation Systems

Wibral, Matthias - Institute for the Study of Labor (IZA) - 2014

Reputation systems aim to induce honest behavior in online trade by providing information about past conduct of users …. Online reputation, however, is not directly connected to a person, but only to the virtual identity of that person. Users can … therefore shed a negative reputation by creating a new account. We study the effects of such identity changes on the efficiency …

Persistent link: https://www.econbiz.de/10010884234

Reputations, Relationships and the Enforcement of Incomplete Contracts

MacLeod, W. Bentley - Institute for the Study of Labor (IZA) - 2006

This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Leffler (1981)) and efficiency wages (Shapiro and Stiglitz...

Persistent link: https://www.econbiz.de/10005233793

Transparency and Reciprocal Behavior in Employment Relations

Irlenbusch, Bernd; Sliwka, Dirk - Institute for the Study of Labor (IZA) - 2003

The impact of transparency on the extent of reciprocal behavior is investigated in a simple repeated gift exchange experiment, where principals set wages and agents respond by choosing effort levels. In addition to the efforts the principals’ payoffs are determined by a random component. It is...

Persistent link: https://www.econbiz.de/10005233886

Laws and Norms

Benabou, Roland; Tirole, Jean - Institute for the Study of Labor (IZA) - 2012

This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals'...

Persistent link: https://www.econbiz.de/10009646323

Dynamic Incentive Contracts under Parameter Uncertainty

Prat, Julien; Jovanovic, Boyan - Institute for the Study of Labor (IZA) - 2010

We analyze a long-term contracting problem involving common uncertainty about a parameter capturing the productivity of the relationship, and featuring a hidden action for the agent. We develop an approach that works for any utility function when the parameter and noise are normally distributed...

Persistent link: https://www.econbiz.de/10008727782

Mixed Up? That's Good for Motivation

Koch, Alexander K.; Peyrache, Eloic - Institute for the Study of Labor (IZA) - 2004

An essential ingredient in models of career concerns is ex ante uncertainty about an agent's type. This paper shows how career concerns can arise even in the absence of any such ex ante uncertainty, if the unobservable actions that an agent takes influence his future productivity. By...

Persistent link: https://www.econbiz.de/10005703606

From Team Spirit to Jealousy: The Pitfalls of Too Much Transparency

Koch, Alexander K.; Morgenstern, Albrecht - Institute for the Study of Labor (IZA) - 2005

Free riding in team production arises because individual effort is not perfectly observable. It seems natural to suppose that greater transparency would enhance incentives. Therefore, it is puzzling that team production often lacks transparency about individual contributions despite negligible...

Persistent link: https://www.econbiz.de/10005703696

Moral Hazard Contracts: Does One Size Fit All?

Koch, Alexander K.; Peyrache, Eloïc - Institute for the Study of Labor (IZA) - 2006

Incentive theory predicts that contract terms should respond to differences in agents’ productivities. Firms’ practice of anonymous contracts thus appears puzzling. We show that such a "one-size-fits-all" approach can be reconciled with standard agency theory if careers are marked by...

Persistent link: https://www.econbiz.de/10005703757

On Reputation: A Microfoundation of Contract Enforcement and Price Rigidity

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

price rigidity. Reputation powerfully amplifies the positive effects of social preferences on contract enforcement by … interactions, suggesting that it may aggravate price rigidities. Surprisingly, reputation in fact weakens the wage and price …

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