This paper investigates the effects of managerial incentives on favoritism in promotion decisions. First, we theoretically show that favoritism leads to a lower quality of promotion decisions and in turn lower efforts. But the effect can be mitigated by pay-for-performance incentives for...

We investigate the use of performance appraisal (PA) in German Firms. First, we derive hypotheses on individual and job based determinants of PA usage. Based on a representative German data set on individual employees, we test these hypotheses and also explore the impact of PA on performance pay...

We derive a natural definition of responsibility in a formal model in which employees care for their career prospects: A superior holds a subordinate responsible for a task when she announces her belief that this subordinate contributes most to this task. We show that those announced beliefs...

We experimentally investigate a simple version of Holmstroem's career concerns model in which firms compete for agents in two consecutive periods. Profits of firms are determined by agents' unknown ability and the effort they choose. Before making second-period wage offers firms are informed...

We derive a natural definition of responsibility in a formal model where employees care for their career prospects: A superior holds a subordinate responsible for a task, when she announced her beliefs that this subordinate contributes most to this task. We show, that those announced beliefs...

We derive a natural definition of responsibility in a formal model where employees care for their career prospects: A superior holds a subordinate responsible for a task, when she announces her beliefs that this subordinate contributes most to this task. We show, that those announced beliefs...

Many experiments indicate that most individuals are not purely motivated by material self interest, but also care about the well being of others. In this paper we examine tournaments among inequity averse agents, who dislike disadvantageous inequity (envy) and advantageous inequity (compassion)....

The impact of wage increases on job satisfaction are explored. First, it is empirically established that current job satisfaction rises with absolute wage level as well as with wage increases. Second, a basic job satisfaction function is constructed based on the empirical results, and...