Using an experiment, we investigate whether job candidates’ noncontractible effort promises increase their actual effort in the work relationship when the labor market is competitive. Due to promise-keeping preferences, individuals tend to keep promises even if doing so is costly. However,...

We investigate whether and under which conditions top management uses or commits to not use new information when deciding about intra-year bonus target revisions, and how this use or non-use of information varies contingent on firms’ organizational design. First, we analyze whether firms’...

This study investigates when and why intra-year bonus target revisions occur. This is important as intra-year target revisions occur regularly in practice but are not well understood. Specifically, we analyze two potential drivers of intra-year bonus target revisions: reduced managerial...

This study examines the benefits of employee involvement in feedback system design for cooperation. Understanding how to enhance cooperation is important given the increasing use of team settings in practice. Control systems often provide feedback on cooperative actions of coworkers, which can...

The modern business environment is a dynamic one, and organizations must be adaptive. In addition, organizations rely increasingly upon groups. This study provides an examination of the effectiveness of controls in dynamic, cooperative environments. As control, we study a mechanism that provides...

In an experiment, we model two stylized facts about capital budgeting practice, budgetary slack creation and delegation of decision-making authority. In our setting, under centralization, headquarters announces a budget, the division manager gives a cost report, and headquarters decides on the...

In an experiment, we model two stylized facts about capital budgeting practice, budgetary slack creation and delegation of decision-making authority. In our setting, under centralization, headquarters announces a budget, the division manager gives a cost report, and headquarters decides on the...