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Subjective Evaluations: Discretionary Bonuses and Feedback Credibility
Fuchs, William - Institute for the Study of Labor (IZA) - 2013
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...
Persistent link: https://www.econbiz.de/10010720080
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Negative Externalities and Equilibrium Existence in Competitive Markets with Adverse Selection
von Siemens, Ferdinand; Kosfeld, Michael - Institute for the Study of Labor (IZA) - 2009
Rothschild and Stiglitz (1976) show that there need not exist a competitive equilibrium in markets with adverse selection. Building on their framework we demonstrate that externalities between agents − an agent's utility upon accepting a contract depends on the average type attracted by the...
Persistent link: https://www.econbiz.de/10004976877
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Black Sheep and Walls of Silence
Muehlheusser, Gerd; Roider, Andreas - Institute for the Study of Labor (IZA) - 2004
In this paper we analyze the frequently observed phenomenon that (i) some members of a team ("black sheep") exhibit behavior disliked by other (honest) team members, who (ii) nevertheless refrain from reporting such misbehavior to the authorities (they set up a "wall of silence"). Much cited...
Persistent link: https://www.econbiz.de/10005822967
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Courtesy and Idleness: Gender Differences in Team Work and Team Competition
Ivanova-Stenzel, Radosveta; Kübler, Dorothea - Institute for the Study of Labor (IZA) - 2005
Does gender play a role in the context of team work? Our results based on a real-effort experiment suggest that performance depends on the composition of the team. We find that female and male performance differ most in mixed teams with revenue sharing between the team members, as men put in...
Persistent link: https://www.econbiz.de/10005566353
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The Economics of Credence Goods: On the Role of Liability, Verifiability, Reputation and Competition
Dulleck, Uwe; Kerschbamer, Rudolf; Sutter, Matthias - Institute for the Study of Labor (IZA) - 2009
determinants for efficiency in credence goods markets. While theory predicts that either liability or verifiability yields … efficiency, we find that liability has a crucial, but verifiability only a minor effect. Allowing sellers to build up reputation …
Persistent link: https://www.econbiz.de/10005822832
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Strategic Incomplete Contracts: Theory and Experiments
Erkal, Nisvan; Wu, Steven Y.; Roe, Brian E. - Institute for the Study of Labor (IZA) - 2014
We develop a model of strategic contractual incompleteness that identifies conditions under which principals might omit even costlessly verifiable terms. We then use experiments to test comparative statics predictions of the model. While it is well known that verifiability imperfections can...
Persistent link: https://www.econbiz.de/10011105069
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Testing Canonical Tournament Theory: On the Impact of Risk, Social Preferences and Utility Structure
Sheremeta, Roman M.; Wu, Steven Y. - Institute for the Study of Labor (IZA) - 2012
We use experiments to test comparative statics predictions of canonical tournament theory. Both the roles of principal … tournament design. Consistent with theory, we observed an incentive effect from raising the winner's prize. However, we also … observed several empirical puzzles that appeared to contradict theory. Controlling for social preferences did not resolve the …
Persistent link: https://www.econbiz.de/10009646321
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Hidden Action, Identification, and Organization Design
Schnedler, Wendelin - Institute for the Study of Labor (IZA) - 2010
Incentives often fail in inducing economic agents to engage in a desirable activity; implementability is restricted. What restricts implementability? When does re-organization help to overcome this restriction? This paper shows that any restriction of implementability is caused by an...
Persistent link: https://www.econbiz.de/10008727777
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Bonus Culture: Competitive Pay, Screening, and Multitasking
Benabou, Roland; Tirole, Jean - Institute for the Study of Labor (IZA) - 2013
This paper analyzes the impact of labor market competition and skill-biased technical change on the structure of compensation. The model combines multitasking and screening, embedded into a Hotelling-like framework. Competition for the most talented workers leads to an escalating reliance on...
Persistent link: https://www.econbiz.de/10010635587
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Relative Performance Pay, Bonuses, and Job-Promotion Tournaments
Kräkel, Matthias; Schöttner, Anja - Institute for the Study of Labor (IZA) - 2008
Several empirical studies have challenged tournament theory by pointing out that (1) there is considerable pay …
Persistent link: https://www.econbiz.de/10005822027