This paper studies the interplay between economic incentives and social norms in firms. We introduce a general … a simple model of team production we examine the interplay of different types of contracts with social norms. We show … also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort. …

talented workers leads to an escalating reliance on performance pay and other high-powered incentives, thereby shifting effort … distorts incentives downward in order to extract rents. More generally, as declining market frictions lead employers to compete …, while inequality tends to rise monotonically. Bonus caps and income taxes can help restore balance in agents' incentives and …

consequences. A principal-agent experiment is studied in which prior to contract choice principals are informed about past actions … principals agents exert nearly 50% higher efforts under a fixed wage contract when an informed principal had chosen this contract …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations … effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like … the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and …

talented workers leads to an escalating reliance on performance pay and other high-powered incentives, thereby shifting effort … distorts incentives downward in order to extract rents. More generally, as declining market frictions lead employers to compete …, while inequality tends to rise monotonically. Bonus caps and income taxes can help restore balance in agents' incentives and …

This paper studies the interplay between economic incentives and social norms in firms. We introduce a general … a simple model of team production we examine the interplay of different types of contracts with social norms. We show … also show how social norms can induce multiplicity of equilibria and how steeper economic incentives can reduce effort. …

consequences. A principal-agent experiment is studied in which prior to contract choice principals are informed about past actions … agents exert nearly 50% higher efforts under a fixed wage contract when an informed principal had chosen this contract …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations … effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like … the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and …

tournament contract incorporating both incentives at the top and at the bottom induces the highest effort, especially in larger …We utilize a laboratory experiment to compare effort provision under optimal tournament contracts with different …