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Productive low morale

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  • Zhao, Rui R.

Abstract

This paper models employment relationship as a repeated principal-agent problem with private evaluation. The efficient contracts exhibit correlated movements between lagged wage and current effort that are consistent with the positive feedback between pay and morale in practice. Low morale therefore is an integral part of a well-functioning relationship.

Suggested Citation

  • Zhao, Rui R., 2009. "Productive low morale," Economics Letters, Elsevier, vol. 103(1), pages 18-22, April.
    • Handle: RePEc:eee:ecolet:v:103:y:2009:i:1:p:18-22
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    References listed on IDEAS

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    7. William Fuchs, 2007. "Contracting with Repeated Moral Hazard and Private Evaluations," American Economic Review, American Economic Association, vol. 97(4), pages 1432-1448, September.
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    Cited by:

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    2. Zhao, Rui R., 2012. "Renegotiation and conflict resolution in relational contracting," Games and Economic Behavior, Elsevier, vol. 75(2), pages 964-983.

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