Inspired by a recent observation about an online retail company, this paper explains why a firm may find it optimal to offer an exit bonus to recent hires so as to induce self-selection. We study a double adverse selection problem, in which the principal can neither observe agents’ commitment...

This paper studies how social relationships between managers and employees affect relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The contract may contain two types of...

We conduct a field experiment in a naturally occurring labor environment and track whether the performance of workers responds to unexpected wage increases. Specifically, we investigate how the timing of wage increases affects efforts. We find that workers' performance is about 11% higher for...

Gender differences in overconfidence have been extensively documented in the empirical literature, but the implications for labor market outcomes are not well understood. In this paper, we analyze how men's relatively higher overconfidence, combined with competitive job incentives, affects...

Competitive rewards are often assigned on a regular basis, e.g., in annual salary negotiations or employee-of-the-month schemes. The repetition of competitions can imply that opponents are matched based on earlier outcomes. Using a real-effort experiment, we examine how cheating and effort...

We use a ten-round online mind game to determine whether the effect of honesty nudges depends on timing and content. Reminding individuals about the right thing to do increases honesty. Including information that it is possible to assess an individual's dishonesty strengthens the effect of the...