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Schnedler, Wendelin - Alfred-Weber-Institut für Sozial- und … - 2007

Consider a principal-agent relationship in which more eort by the agent raises thelikelihood of success. Does rewarding success, i.e., paying a bonus, increase eort inthis case? I nd that bonuses have not only an incentive but also an income eect.Overall, bonuses paid for success may well reduce...

Persistent link: https://www.econbiz.de/10005868401

Implicit vs. explicit incentives : theory and a case study

Demougin, Dominique; Fabel, Oliver; Thomann, Christian - 2009

We derive the optimal contract between a principal and a liquidity-constrained agent in a stochastically repeated environment. The contract comprises a court-enforceable explicit bonus rule and an implicit fixed salary promise that must be self-enforcing. Since the agent's rent increases with...

Persistent link: https://www.econbiz.de/10003850322

When randomization in collective tournaments is profitable for the principal

Lehmann, Stefanie Aniela - 2008

In the context of principal-agent theory risk is largely seen as a source that causes inefficiencies and lowers incentives and accordingly is not in the principal’s interest. In this paper I compare two different designs of a collective tournament where output in a team is generated through a...

Persistent link: https://www.econbiz.de/10003850395

Doping and cheating in contest-like situations

Kräkel, Matthias (contributor) - 2006

Individuals who compete in a contest-like situation (for example, in sports, in promotion tournaments, or in an appointment contest) may have an incentive to illegally utilize resources in order to improve their relative positions. We analyze such doping or cheating within a tournament game...

Persistent link: https://www.econbiz.de/10003377751

You don't always get what you pay for

Schnedler, Wendelin - 2007

Consider a principal-agent relationship in which more effort by the agent raises the likelihood of success. Does rewarding success, i.e., paying a bonus, increase effort in this case? I find that bonuses have not only an incentive but also an income effect. Overall, bonuses paid for success may...

Persistent link: https://www.econbiz.de/10003592884

Should you allow your agent to become your competitor? : On non-compete agreements in employment contracts

Kräkel, Matthias (contributor); Sliwka, Dirk (contributor) - 2006

We discuss a principal-agent model in which the principal has the opportunity to include a non-compete agreement in the employment contract. We show that not imposing such an agreement can be beneficial for the principal as the possibility to leave the firm generates implicit incentives for the...

Persistent link: https://www.econbiz.de/10003301668

Increasing income inequality : productivity, bargaining and skill-upgrading

Frederiksen, Anders; Poulsen, Odile - 2010

In recent decades most developed countries have experienced an increase in income inequality. In this paper, we use an equilibrium search framework to shed additional light on what is causing an income distribution to change. The major benefit of the model is that it can accommodate shocks to...

Persistent link: https://www.econbiz.de/10003941761

To shape the future : how labor market entry conditions affect individuals’ long-run wage profiles

Brunner, Beatrice; Kuhn, Andreas - 2009

We study the long-run effects of initial labor market conditions on wages for a large sample of male individuals … starting wages. This initial effect turns out to be quite persistent and even though wages do catch up later on, large effects … aggregate level are key to explain wages' adjustment process in the longer run. -- Labor market cohorts ; initial labor market …

Persistent link: https://www.econbiz.de/10003923899

The firm as the locus of social comparisons : internal labor markets versus up-or-out

Auriol, Emmanuelle; Friebel, Guido; Lammers, Frauke - 2012

We suggest a parsimonious dynamic agency model in which workers have status concerns. A firm is a promotion hierarchy in which a worker's status depends on past performance. We investigate the optimality of two types of promotion hierarchies: (i) internal labor markets, in which agents have a...

Persistent link: https://www.econbiz.de/10009530691

The impact of labor market entry conditions on initial job assignment, human capital accumulation, and wages

Brunner, Beatrice; Kuhn, Andreas - 2010

We estimate the effects of labor market entry conditions on wages for male individuals first entering the Austrian … labor market between 1978 and 2000. We find a large negative effect of unfavorable entry conditions on starting wages as …

Persistent link: https://www.econbiz.de/10009312922