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Optimal incentive contracts for a worker who envies his boss : presented at CESifo Venice Summer Institute, Workshop on Dissecting Globalization, July 2004

Dur, Robert A. J.; Glazer, Amihai - 2004

A worker's utility may increase in his own income, but envy can make his utility decline with his employer's income … various assumptions about the object and generality of envy. Envy amplifies the effect of incentives on effort and, therefore …, increases optimal incentive pay. Moreover, envy can make profitsharing optimal, even when the worker's effort is fully …

Persistent link: https://www.econbiz.de/10011450877

Flexicurity, wage dynamics and inequality over the life-cycle

Bingley, Paul; Cappellari, Lorenzo; … - 2011

We investigate the relationship between life-cycle wages and flexicurity in Denmark. We separate permanent from transitory wages and characterise flexicurity using membership of unemployment insurance funds. We find that flexicurity is associated with lower wage growth heterogeneity over the...

Persistent link: https://www.econbiz.de/10009273938

Fairness, incentives and contractual incompleteness

Fehr, Ernst; Klein, Alexander; Schmidt, Klaus M. - 2001

We show that concerns for fairness may have dramatic consequences for the optimal provision of incentives in a moral hazard context. Incentive contracts that are optimal when there are only selfish actors become inferior when some agents are concerned about fairness. Conversely, contracts that...

Persistent link: https://www.econbiz.de/10011398105

Public policy for venture capital

Keuschnigg, Christian; Nielsen, Søren Bo - 2001

This paper proposes a simple partial equilibrium model to investigate the effects of government policy on venture capital backed investments. Giving up an alternative career, entrepreneurs focus their effort on a single, high risk venture each. Venture capitalists acquire an equity stake and...

Persistent link: https://www.econbiz.de/10011398877

Monitoring, cross subsidies, and universal banking

Choi, Jay Pil; Stefanadis, Christodoulos - 2015

We formalize the idea that a financial conglomerate may utilize commercial banking activities to cross-subsidize investment banking through bundled offers. The investment banking sector entails supra-normal profits due to incentive problems with security underwriting. Universal banks may aim to...

Persistent link: https://www.econbiz.de/10011342362

Employee referral, social proximity and worker discipline : theory and evidence from India

Dhillon, Amrita; Iversen, Vegard; Torsvik, Gaute - 2013

We study an important mechanism underlying employee referrals into informal low skilled jobs in developing countries. Employers can exploit social preferences between employee referees and potential workers to improve discipline. The profitability of using referrals increases with referee stakes...

Persistent link: https://www.econbiz.de/10009765001

Market transparency, adverse selection, and moral hazard

Klein, Tobias J.; Lambertz, Christian; Stahl, Konrad - 2013

We study the effects of improvements in market transparency on eBay on seller exit and continuing sellers' behavior. An improvement in market transparency by reducing strategic bias in buyer ratings led to a significant increase in buyer valuation especially of sellers rated poorly prior to the...

Persistent link: https://www.econbiz.de/10010227243

Second-degree moral hazard in a real-world credence goods market

Balafoutas, Loukas; Kerschbamer, Rudolf; Sutter, Matthias - 2013 - This version: 16 October 2013

Empirical literature on moral hazard focuses exclusively on the direct impact of asymmetric information on market outcomes, thus ignoring possible repercussions. We present a field experiment in which we consider a phenomenon that we call second-degree moral hazard – the tendency of the supply...

Persistent link: https://www.econbiz.de/10010199693

Optimum delayed retirement credit

Sheshinski, Eytan - 2003

A central question for pension design is how benefits should vary with the age of retirement beyond early eligibility age. It is often argued that in order to be neutral with respect to individual retirement decisions benefits should be actuarially fair, that is, the present value of additional...

Persistent link: https://www.econbiz.de/10011506463

The principal-agent matching market

Dam, Kaniska - 2003

We propose a model based on competitive markets in order to analyse an economy with several principals and agents. We model the principal-agent economy as a two-sided matching game and characterise the set of stable outcomes of this principal-agent matching market. A simple mechanism to...

Persistent link: https://www.econbiz.de/10011507906

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