employee after she has inspected the employee. We find that rewards or sanctions can both discourage shirking, and have similar … and the efficiency gains accrue to employers. In games allowing rewards employers actively reward employees for working … and the efficiency gains are shared more equitably. A treatment where employers can combine sanctions and rewards leads to …

/or rewards following an inspection, we find that both instruments are equally effective in reducing shirking and increasing joint … earnings. When employers have discretion to reward and/or sanction independently of whether they inspect we find that rewards … are more effective than sanctions. In treatments where employers can combine sanctions and rewards employers rely mainly …

punishment opportunities. One important challenge for the mechanism is imperfect information about cooperative behavior. It has … been shown that imperfect information increases misdirected punishment and thereby hampers the efficacy of the punishment … subjects choose to monitor either perfectly or not at all. Little punishment takes place with imperfect information. The large …