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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
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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
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Producer Protection Legislation and Termination Damages in the Presence of Contracting Frictions
Wu, Steven Y. - Institute for the Study of Labor (IZA) - 2009
This study models producer protection legislation that would grant growers the right to claim damages (PPLD) if their contracts are prematurely terminated. In the absence of contracting frictions that prevent contractors from redesigning contracts to accommodate exogenous policy changes, PPLD...
Persistent link: https://www.econbiz.de/10005103260
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Search and Retirement under Asymmetric Information
Bi, Sheng; Langot, François - Institute for the Study of Labor (IZA) - 2014
We consider a labor market where the competitive search equilibrium is inefficient due to asymmetrical information. At the time when firms commit to specific hiring costs, workers hold private information on their intention of entering into retirement before the termination of the contract. When...
Persistent link: https://www.econbiz.de/10010790513
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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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Optimal Use of Labor Market Policies: The Role of Job Search Assistance
Wunsch, Conny - Institute for the Study of Labor (IZA) - 2010
This paper studies the role of job search assistance programs in optimal welfare-to-work programs. The analysis is based on a framework, that allows for endogenous choice of benefit types and levels, wage taxes or subsidies, and activation measures such as monitoring and job search assistance...
Persistent link: https://www.econbiz.de/10008615438