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You don't always get what you pay for
Schnedler, Wendelin - 2007
Consider a principal-agent relationship in which more effort by the agent raises the likelihood of success. Does rewarding success, i.e., paying a bonus, increase effort in this case? I find that bonuses have not only an incentive but also an income effect. Overall, bonuses paid for success may...
Persistent link: https://www.econbiz.de/10010268396
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Team governance: empowerment or hierarchical control
Friebel, Guido; Schnedler, Wendelin - 2007
We investigate a team setting in which workers have different degrees of commitment to the outcome of their work. We show that if there are complementarities in production and if the team manager has some information about team members, interventions that the manager undertakes in order to...
Persistent link: https://www.econbiz.de/10010268432
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The role of salience in performance schemes: Evidence from a field experiment
Englmaier, Florian; Roider, Andreas; Sunde, Uwe - 2012
tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest … incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically … and economically important for performance. We find that higher salience of incentives for quantity increases quantity …
Persistent link: https://www.econbiz.de/10010282221
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Deferred Compensation and Gift Exchange : An Experimental Investigation into Multi-Period Labor Markets
Wallace, Brian; Seltzer, Andrew J.; Huck, Steffen - 2004
This paper examines the relationship between firms? wage offers and workers? supply of effort using a three-period experiment. In equilibrium, firms will offer deferred compensation: first period productivity is positive and wages are zero, while third period productivity is zero and wages are...
Persistent link: https://www.econbiz.de/10010261943
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Output-Based Pay: Incentives, Retention or Sorting?
Lazear, Edward P. - 2003
of the typical American firm. Variable pay is usually touted as a way to provide incentives to managers whose interests …
Persistent link: https://www.econbiz.de/10010262719
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The sociology of groups and the economics of incentives: theory and evidence on compensation systems
Encinosa, William E.; Gaynor, Martin; Rebitzer, James B. - 2005
data. Factors emphasized in the economic theory of agency, notably risk aversion, also shape pay policies but these factors …
Persistent link: https://www.econbiz.de/10010267317
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Transparency, inequity aversion, and the dynamics of peer pressure in teams: theory and evidence
Mohnen, Alwine; Pokorny, Kathrin; Sliwka, Dirk - 2008
We provide an explanation for peer pressure in teams based on inequity aversion. Analyzing a two-period model with two agents, we find that the effect of inequity aversion strongly depends on the information structure. When contributions are unobservable, agents act as if they were purely...
Persistent link: https://www.econbiz.de/10010268881
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On the Hidden Costs of Incentive Schemes
Sliwka, Dirk - 2003
By enriching a principal-agent model it is shown that the introduction of monetary incentives may reduce an agent … convictions of others, high powered incentives signal that not sticking to agreements is a widespread behavior and may lead to …
Persistent link: https://www.econbiz.de/10010261572
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Extrinsic rewards and intrinsic motives: Standard and behavioral approaches to agency and labor markets
Rebitzer, James B.; Taylor, Lowell J. - 2010
Employers structure pay and employment relationships to mitigate agency problems. A large literature in economics documents how the resolution of these problems shapes personnel policies and labor markets. For the most part, the study of agency in employment relationships relies on highly...
Persistent link: https://www.econbiz.de/10010272684
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Potential, prizes and performance : testing tournament theory with professional tennis data
Sunde, Uwe - 2003
This paper tests two hypotheses from the theory of elimination tournaments: (i) that uneven tournaments, where the … contestants are ex ante heterogeneous, entail lower effort exertion; this is a prediction from agency theory that has not been … tested empirically before; and (ii) whether incentives set through prizes matter for effort exertion; this assumption …
Persistent link: https://www.econbiz.de/10010261647