This paper analyses the implications of a currently publicly debated issue, namely the introduction of a bonus tax. We shed light on the effects of the bonus tax on compensation components and study its incidence. We use the Principal Agent model within a two-country framework and consider two...

We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government's choice on...

If the future market wage is uncertain, engaging in long-term employment is risky, with the risk depending on how regulated the labor market is. In our experiment long-term employment can result either from offering long-term contracts or from repeatedly and mutually opting for rematching....

Lenders condition future loans on some index of past performance. Typically, banks condition future loans on repayments of earlier obligations whilst international organizations (official lenders) condition future loans on the implementation of some policy action ('investment'). We build an...

The present paper uses a comparison of Japan and the US to argue that the debate about corporate governance reform is best framed in terms of systems of complementary instruments and institutions. It argues that the Japanese and US systems of corporate governance differ along many dimensions,...

Rank-order tournaments are usually modeled simultaneously. However, real tournaments are often sequentially. We show that agents' strategic behavior significantly differs in sequential tournaments compared to simultaneous tournaments. In a sequential tournament, under certain conditions the...

An empirical model of managers' demand for agency goods is derived and estimated using the Almost Ideal Demand System of Deaton and Muellbauer (AER 1980). As in Jensen and Meckling (JFE 1976), we derive managers' demand for agency goods by maximizing a managerial utility function where managers...

Most contracts that individuals enter into are not written from scratch; rather, they depend upon forms and terms that have been successful in the past. In this paper, we study the structure of form construction contracts published by the American Institute of Architects (AIA). We show that...

It has been suggested in the literature that a source of incompleteness in the agency relationship between the doctor and the patient is that the provider may respond to an incomplete or biased perception of the patient's interests. However, this has not been shown empirically. This paper is...

In our model, an agent produces an outcome by a costly effort and then distributes it among heterogeneous users. The agent's payoff is the weighted sum of the users? shares and the coefficient reflecting their heterogeneity. When the agent neglects users? heterogeneity the game leads to an...