We investigate how the convexity of a firm’s incentives interacts with worker overconfidence to affect sorting decisions and performance. We demonstrate experimentally that overconfident employees are more likely to sort into a non-linear incentive scheme over a linear one, even though this...

Environmental regulation seeks to limit pollution through strict emissions thresholds for existing cars, yet it remains unclear how frequently inspectors enforce these and what impact test manipulation has on policy efficacy. We demonstrate (1) a strong discontinuity in the emissions results...