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Emotions and Compensation

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Author Info

  • Matthias Kräkel

Abstract

I introduce a concept of emotions that emerge when workers evaluate their individual performances or when they compare their own performances with those of co-workers. I analyze the interplay of emotions and incentives by focusing on a certain scheme of worker compensation that is frequently used in practice: a piece-rate system. My findings show that standard results of compensation theory significantly change when introducing emotions. I identify certain conditions under which emotions lead to additional incentives and under which the employer benefits from emotional workers, and I sketch the impact of risk aversion on the interplay of emotions and incentives, and the influence of a worker’s success probability on the intensity of his emotions.

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Bibliographic Info

Article provided by LMU Munich School of Management in its journal Schmalenbach Business Review.

Volume (Year): 60 (2008)
Issue (Month): 2 (April)
Pages: 145-159

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Handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:145-159

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Related research

Keywords: Emotions; Incentives; Piece Rates; Worker Compensation;

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Cited by:
  1. Ying Yang & Niladri Syam & James Hess, 2013. "Thrill of victory and agony of defeat: Emotional rewards and sales force compensation," Quantitative Marketing and Economics, Springer, vol. 11(4), pages 379-402, December.

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