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Authority and Incentives in Organizations
Kräkel, Matthias - Institute for the Study of Labor (IZA) - 2013
The paper analyzes how the choice of organizational structure leads to the best compromise between controlling behavior based on authority rights and minimizing costs for implementing high efforts. Concentrated delegation and hierarchical delegation turn out to be never an optimal compromise. If...
Persistent link: https://www.econbiz.de/10010632999
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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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A Product Market Theory of Training and Turnover in Firms
Gersbach, Hans; Schmutzler, Armin - Institute for the Study of Labor (IZA) - 2001
We develop a product market theory that identifies determinants of worker turnover and explains why firms invest in …
Persistent link: https://www.econbiz.de/10005703400
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Risk, Delegation, and Project Scope
Roider, Andreas - Institute for the Study of Labor (IZA) - 2007
This paper studies a partial-contracting model where an agent may provide effort to increase a project’s scope before some later decisions have to be taken. Consistent with existing empirical evidence, we find a positive relationship between exogenous risk and delegation. That is, we show that...
Persistent link: https://www.econbiz.de/10005703275
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Should You Allow Your Agent to Become Your Competitor? On Non-Compete Agreements in Employment Contracts
Kräkel, Matthias; Sliwka, Dirk - Institute for the Study of Labor (IZA) - 2006
We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the...
Persistent link: https://www.econbiz.de/10005703004
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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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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
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Worker Self-Selection and the Profits from Cooperation
Kosfeld, Michael; von Siemens, Ferdinand - Institute for the Study of Labor (IZA) - 2008
We investigate a competitive labor market with team production. Workers differ in their motivation to exert team effort and types are private information. We show that there can exist a separating equilibrium in which workers self-select into different firms and firms employing cooperative...
Persistent link: https://www.econbiz.de/10005822981
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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