We report the first results for Korean firms on the incidence, diffusion, scope and effects of diverse employee financial participation schemes, such as Profit Sharing Plans (PSPs), Employee Stock Ownership Plans (ESOPs), Stock Option Plans (SOPs) and Team Incentive Plans (TIPs). In do doing, we...

This paper analyzes the characteristics of optimal menu of contracts in the case that agents’ wealth and actions are hidden from the principal. We first consider a benchmark case that the wealth levels of all agents are known to the principal, and we show that the power of incentives for...

Can a firm increase its workers' eff ort by introducing competition through performance-based ranking? On one hand such ranking can increase eff ort because of individuals' desire for status from high ranks, but on the other, it can demotivate them or make them wary of outperforming peers. This...

This paper studies wage structure characteristics and their incentive effects within one firm. Based on personnel records and an employee survey, we provide evidence that wages are attached to jobs and that promotions play a dominant role as a wage determinant. We furthermore show that a...

Comparative payment schemes and tournament-style promotion mechanisms are ubiquitous in the work place. We test experimentally whether they have a negative impact on the willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment...

Ordinary least squares (OLS) estimates are frequently used to measure the effects of managerial incentives on corporate innovation. However, these estimates suffer from two data problems. First, corporate innovation data have a discrete spike at zero because many firms never engage in corporate...

Group-based incentive pay is attractive in contexts where production is complex and interdependent, yet freeriding is a paramount concern. We assess the introduction of group-based performance pay in a modern industrial production setting using difference-in-difference estimation. Performance...

Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents in a highly non-linear incentive system, we find that the improvement in productivity far outweighed the costs associated with bunching distortions and other gaming...

Using administrative data from a major Chinese insurance firm that raised its sales targets and rewards for insurance agents in a highly non-linear incentive system, we find that the improvement in productivity far outweighed the costs associated with bunching distortions and other gaming...

In teamwork settings, providing effective leadership can be challenging for team leaders due to multitasking and the difficulty in measuring and rewarding leadership input. These challenges might lead to underprovision of leadership activities, which can ultimately impede the productivity of the...