To explain potential sources of wage rigidity this article analyzes a model of reciprocalkindness applied to a repeated ultimatum game with changing and nonzeroconflict payoffs. The model is also tested in a laboratory experiment. The resultsare compatible with the rentsharingapproach to wage...

We use German administrative and survey data to investigate the heterogeneity of part-time penalties in hourly wages and growth rates. Exploiting tax reforms for identification, we find substantial heterogeneity in part-time wage penalties from -28.3% to -7.2% compared to full-time. The...

Although stock options are commonly observed in chief executive o±cer (CEO) compensation contracts, there is theoretical controversy about whether stock options are part of the optimal contract. Using a sample of Fortune 500 companies, we solve an agency model calibrated to the company-specific...

Subjective evaluations are widely used, but call for different contracts from classical moral-hazard settings. Previous literature shows that contracts require payments to third parties. I show that the (implicit) assumption of deterministic contracts makes payments to third parties necessary....

Although relative performance schemes are pervasive in organizations reliable empirical dataon induced sabotage behavior is almost non-existent. We study sabotage in tournaments in acontrolled laboratory experiment and are able to confirm one of the key insights from theory:effort and sabotage...

This paper investigates the role that idiosyncratic uncertainty plays in shaping social preferences over the degree of labor market flexibility, in a general equilibrium model of dynamic labor demand where the productivity of firms evolves over time as a Geometric Brownian motion...

This paper studies the impact of labour taxation in a shirking model with wage bargaining.It is shown that if the ratio of unemployment compensation to the net-of-tax wage iskept fixed a tax cut leads to higher unemployment. When the unemployment benefitsreplacement ratio is allowed to change,...

We analyze the following questions associated with outsourcing and profit sharing under imperfect labour markets. How does strategic outsourcing influence wage formation, profit sharing and employee effort when firms commit to optimal profit sharing before wage formation or decide for profit...

This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across...

We present an experimental test of a shirking model where monitoring intensityis endogenous and effort a continuous variable. Wage level, monitoring intensityand consequently the desired enforceable effort level are jointly determined bythe maximization problem of the firm. As a result,...