Conventional wisdom suggests that an increase in monetary incentives should induce agents to exert higher effort. In this paper, however, we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive...

This paper examines how professional female tennisplayers react to: i) prize incentives and ii) heterogeneity in ex ante players' abilities. It is found that a larger prize spread encourages women to increase effort, even when controlling for many tournament and player characteristics. Further...

Conventional wisdom suggests that an increase in monetary incentives should induce agents to exert higher effort. In this paper, however, we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive...

Two alternative relative compensation schemes are compared with respect to total output that can be generated at a given sum of salaries. While the promotion regime guarantees that any salary increase is permanent, the premium system allows a reduction in the income of an agent to the base...

This study uses panel data describing about 6,500 employees in a large international company to study the incentive effects of performance related pay. The company uses two performance related remuneration mechanisms. One is an individual ''surprise'' bonus payment. The other is a more...

Conventional wisdom suggests that an increase in monetary incentives should induce agents to exert higher effort. In this paper, however, we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive...

This study uses panel data describing about 6,500 employees in a large international company to study the incentive effects of performance related pay. The company uses two performance related remuneration mechanisms. One is an individual surprise bonus payment. The other is a more structured...

Skilled labour has gained significance as a production factor in the age of information technology, but accounting does not recognize human capital as an asset that contributes to the firm's earning power. This paper suggests a method to develop a latent index to proxy the managerial-skill...

This paper links the quality (i.e. noise and bias) of information available for production decisions and performance evaluation to the choice of whether or not production should occur in teams. The information system provides agents with access to an early but imprecise signal about productivity...

We develop a dynamic principal-agent model for financing a multistage project. The optimal contract displays the following unique features: (i) There is a pecking order between milestone bonuses and deferred compensation: when an intermediate stage succeeds, principal prefers to use deferred...