Variable pay, defined as pay that is tied to some measure of a firm's output, has become more important for executives of the typical American firm. Variable pay is usually touted as a way to provide incentives to managers whose interests may not be perfectly aligned with those of owners. The...

With the growth of the literature on incentive compensation has come the belief by some that incentive pay may be less rigid than pay that is not designed to effect incentives. Some have gone so far as to argue that this may explain differences in unemployment rates across countries. it is shown...

Individuals involved in basic research, like other workers, respond to incentives. Funding agencies provide implicit incentives when they specify the rules by which awards are made. The following analysis is an exercise in understanding incentives at an applied level. Specific rules are examined...