Nosenzo, Daniele; Offerman, Theo; Sefton, Martin; Veen, … - Centre for Decision Research and Experimental Economics … - 2010
We examine the effectiveness of bonuses and fines in an ‘inspection game’ where an employer can learn the effort of a worker through costly inspection. Standard game theoretic analysis predicts that fines discourage shirking, whereas bonuses encourage shirking. In contrast, ownpayoff effects...