We investigate a potential selection benefit of stock-based compensation for rank-and-file employees, whose pay under this compensation form is insensitive to their individual efforts. Using a laboratory experiment, where we control for both the timing and expected magnitude of compensation, we...

In an environment where capital market participants collectively possess superior information about a decision faced by a firm manager, we use an experimental market to analyze the effectiveness with which the market communicates this information to the manager through stock price. We do so in a...

In an environment where individual productivity can be increased through efforts directed at a conventional task approach and more efficient task approaches that can be identified through unconventional thinking, we examine the effects of productivity-target difficulty and pay contingent on...

We use a laboratory experiment to investigate how the level of a budget assigned to an employee by a firm owner affects employee effort. Consistent with reciprocity and fairness models, we find a negative relationship between budget levels and employee effort - many employees responded to a low...