The Peter Principle captures two stylized facts about hierarchies: first, promotions often place employees into jobs for which they are less well suited than for that previously held. Second, demotions are extremely rare. Why do organizations not correct 'wrong' promotion decision? This paper...

A previous literature cautions that paying workers for performance might crowd out non-monetary motives to work hard. Empirical evidence from the field, however, has been based on between-subjects designs that are best suited for detecting crowding out due to low-powered incentives. High-powered...

This paper experimentally investigates whether firms should use both prosocial incentives and monetary incentives to motivate workers. We conduct a real-effort experiment on a data entry job. It is found that prosocial incentives will likely reduce work quality. When worker's compensation does...

I examine the effects of providing workers with relative performance information (RPI) on employers' promotion decisions and the impact of those decisions on worker performance. In my experimental setting, the job after promotion requires higher-level abilities than the current job. I find that...

Employees often learn about their ability while working, and the resulting beliefs interact with pay incentives to shape employment outcomes. This paper investigates this issue within a model that incorporates learning about ability on the job, dynamic selection, effort, and variation in pay...

Rewards often help to exercise self-control. However, whether a person receives an external or a self-reward may have different implications for her future self-control motivation. Recent research suggests that external rewards may improve self-control in the short-run but lead to a decrease of...

This paper examines the optimal incentive scheme in motivating people to innovate under ambiguity. When an innovation's prospects are ambiguous, the use of extrinsic, high-powered incentives can lead the agent's beliefs about the project's outcome to deviate from that of the principal's, which...

Work Motivation has been a source of inspiration for several business studies aiming at designing the best incentive system that could maximize motivational level to employees and hence increase their job-satisfaction, performance level and organizational commitment. Some of these studies have...

I develop a principal-agent model where a profit-maximizing principal employs two agents to undertake a project. The employees differ in terms of their intrinsic motivation towards the project and this is their private information. I analyze the impact of individual and team incentives on the...