The literature on public procurement pays great attention to the rules underlying tendering procedures as well as on the specification of the type of contract to be awarded. Less attention has been paid to the incompleteness of the contract; this issue is relevant in the public work sector...

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...

We show experimentally that fairness concerns may have a decisive impact on the actual and optimal choice of contracts in a moral hazard context. Bonus contracts that offer a voluntary and unenforceable bonus for satisfactory performance provide powerful incentives and are superior to explicit...

We show experimentally that fairness concerns may have a decisive impact on both the actual and the optimal choice of contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become inferior when some agents value fairness. Conversely,...

We show experimentally that fairness concerns may have a decisive impact on both the actual and the optimal choice of contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become inferior when some agents value fairness. Conversely,...

This paper explores the meaning and implications of the desire by workers for impact. We find that this impact motive can make a firm in a competitive labor market face an upward-sloping supply curve of labor, lead workers with the same characteristics but at different firms to earn different...

In a sequencing problem with linear time cost, Suijs (1996) proved that it is possible to achieve first best. By first best we mean that one can find mechanisms that satisfy efficiency of decision, dominant strategy incentive compatibility and budget balancedness. In this paper we show that...

We consider the problem of a principal who wishes to contract with a privately informed agent and is not able to commit to not renegotiating any mechanism. That is, we allow the principal, after observing the outcome of a mechanism to renegotiate the resulting contract without cost by proposing...

Optimal team composition has been the focus of exhaustive analysis, academic and otherwise. Yet, much of this analysis has ignored possible dynamic effects: e.g., anticipating that team formation is based on prior performance will affect prior performance. We test this hypothesis in a lab...