This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we …

, managers therefore need to think about how to create and preserve high-quality co-worker relationships. This paper develops a …

convinced that their manager cares for them. Managers can signal their altruistic feelings towards their employees in two ways … altruistic managers may offer lower wages and nevertheless build up better social-exchange relationships with their employees … than egoistic managers do. In such equilibria, a low wage signals to employees that the manager has something else to offer …