This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
On the Hidden Costs of Incentive Schemes Author info | Abstract | Publisher info | Download info | Related research | Statistics Dirk Sliwka
Additional information is available for the following
registered author(s):
By enriching a principal-agent model it is shown that the introduction of monetary incentives may reduce an agent's motivation. In a first step, we allow for the possibility that some agents stick to unverifiable agreements. The larger the fraction of reliable agents, the lower powered will then be the optimal incentive scheme and fixed wages become optimal when performance measurement is costly. If social norms matter such that some agents' reliability is influenced by their beliefs on the convictions of others, high powered incentives signal that not sticking to agreements is a widespread behavior and may lead to lower effort levels.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number
bgse12_2003.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length: 40
Date of creation: May 2003Date of revision:
Handle: RePEc:bon:bonedp:bgse12_2003Contact details of provider: Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany Fax: +49 228 73 9221 Web page: http://www.bgse.uni-bonn.de/index.php?id=494
For technical questions regarding this item, or to correct its listing, contact: (Daniel Park).
Keywords: Incentives ; Intrinsic Motivation ; Motivation Crowding-Out ; Honesty ; Other versions of this item:
Find related papers by JEL classification: M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
This paper has been announced in the following NEP Reports :
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Fehr, Ernst & Schmidt, Klaus M., 2001.
"Theories of Fairness and Reciprocity ,"
Discussion Papers in Economics
14, University of Munich, Department of Economics.
[Downloadable!]
Akerlof, George A, 1982.
"Labor Contracts as Partial Gift Exchange ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 97(4), pages 543-69, November.
[Downloadable!] (restricted)
Dufwenberg, M. & Kirchsteiger, G., 1998.
"A theory of sequential reciprocity ,"
Discussion Paper
37, Tilburg University, Center for Economic Research.
[Downloadable!]
Other versions:
Margin Dufwenberg & Georg Kirchsteiger, 2001.
"A Theory of Sequential Reciprocity ,"
Levine's Working Paper Archive
563824000000000090, David K. Levine.
[Downloadable!] Dufwenberg, Martin & Kirchsteiger, Georg, 2004.
"A theory of sequential reciprocity ,"
Games and Economic Behavior ,
Elsevier, vol. 47(2), pages 268-298, May.
[Downloadable!] (restricted) Gary Charness & Matthew Rabin, 2002.
"Understanding Social Preferences with Simple Tests ,"
Department of Economics, Working Paper Series
1042, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
[Downloadable!]
Other versions:
Gary Charness & Matthew Rabin, 2001.
"Understanding Social Preferences With Simple Tests ,"
University of California at Santa Barbara, Economics Working Paper Series
21-01, Department of Economics, UC Santa Barbara.
[Downloadable!] Gary Charness & Matthew Rabin, 2003.
"Understanding Social Preferences with Simple Tests ,"
General Economics and Teaching
0303002, EconWPA.
[Downloadable!] Gary Charness & Matthew Rabin, 2002.
"Understanding Social Preferences With Simple Tests ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 117(3), pages 817-869, August.
[Downloadable!] (restricted) Edward P. Lazear, 2000.
"Performance Pay and Productivity ,"
American Economic Review ,
American Economic Association, vol. 90(5), pages 1346-1361, December.
[Downloadable!] (restricted)
Ernst Fehr & Simon Gachter & Georg Kirchsteiger, 1997.
"Reciprocity as a Contract Enforcement Device: Experimental Evidence ,"
Econometrica ,
Econometric Society, vol. 65(4), pages 833-860, July.
Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993.
"Does Fairness Prevent Market Clearing? An Experimental Investigation ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 108(2), pages 437-59, May.
[Downloadable!] (restricted)
Holmstrom, Bengt & Milgrom, Paul, 1994.
"The Firm as an Incentive System ,"
American Economic Review ,
American Economic Association, vol. 84(4), pages 972-91, September.
[Downloadable!] (restricted)
Roland Benabou & Jean Tirole, 2003.
"Intrinsic and Extrinsic Motivation ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 70(3), pages 489-520, 07.
[Downloadable!] (restricted)
Frey, Bruno S & Oberholzer-Gee, Felix, 1997.
"The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out ,"
American Economic Review ,
American Economic Association, vol. 87(4), pages 746-55, September.
[Downloadable!] (restricted)
Gibbons, Robert & Murphy, Kevin J, 1992.
"Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence ,"
Journal of Political Economy ,
University of Chicago Press, vol. 100(3), pages 468-505, June.
[Downloadable!] (restricted)
Other versions:
Murphy, K.J. & Gibbons, R., 1990.
"Optimal Incentive Contracts in the Presence of Career Concerns : Theory and Evidence ,"
Papers
90-09, Rochester, Business - Managerial Economics Research Center.
Gibbons, R. & Murphy, K.J., 1990.
"Optimal Incentive Contracts In The Presence Of Career Concerns: Theory And Evidence ,"
Working papers
563, Massachusetts Institute of Technology (MIT), Department of Economics.
Gneezy, Uri & Rustichini, Aldo, 2000.
"A Fine is a Price ,"
Journal of Legal Studies ,
University of Chicago Press, vol. 29(1), pages 1-17, January.
Holmstrom, Bengt & Milgrom, Paul, 1991.
"Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design ,"
Journal of Law, Economics and Organization ,
Oxford University Press, vol. 7(0), pages 24-52, Special I.
Ernst Fehr & Klaus M. Schmidt, .
"A Theory of Fairness, Competition and Cooperation ,"
IEW - Working Papers
iewwp004, Institute for Empirical Research in Economics - IEW.
[Downloadable!]
Other versions:
Fehr, Ernst & Schmidt, Klaus M., 1998.
"A Theory of Fairness, Competition and Cooperation ,"
CEPR Discussion Papers
1812, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Ernst Fehr & Klaus M. Schmidt, 1999.
"A Theory Of Fairness, Competition, And Cooperation ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 114(3), pages 817-868, August.
[Downloadable!] (restricted) Falk, Armin & Fischbacher, Urs, 2006.
"A theory of reciprocity ,"
Games and Economic Behavior ,
Elsevier, vol. 54(2), pages 293-315, February.
[Downloadable!] (restricted)
Other versions:
Armin Falk & Urs Fischbacher, .
"A Theory of Reciprocity ,"
IEW - Working Papers
iewwp006, Institute for Empirical Research in Economics - IEW.
[Downloadable!] Armin Falk & Urs Fischbacher, 2001.
"A Theory of Reciprocity ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!] Falk, Armin & Fischbacher, Urs, 2001.
"A Theory of Reciprocity ,"
CEPR Discussion Papers
3014, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Ernst Fehr & Simon Gaechter, .
"Do Incentive Contracts Crowd out Voluntary Cooperation? ,"
IEW - Working Papers
iewwp034, Institute for Empirical Research in Economics - IEW.
[Downloadable!]
Other versions: Gary E. Bolton & Axel Ockenfels, 2000.
"ERC: A Theory of Equity, Reciprocity, and Competition ,"
American Economic Review ,
American Economic Association, vol. 90(1), pages 166-193, March.
[Downloadable!] (restricted)
Canice Prendergast, 1999.
"The Provision of Incentives in Firms ,"
Journal of Economic Literature ,
American Economic Association, vol. 37(1), pages 7-63, March.
[Downloadable!] (restricted)
Robert Gibbons & Kevin J. Murphy, 1992.
"Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence ,"
NBER Working Papers
3792, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Bernd Irlenbusch & Dirk Sliwka, 2005.
"Incentives, Decision Frames, and Motivation Crowding Out - An Experimental Investigation ,"
IZA Discussion Papers
1758, Institute for the Study of Labor (IZA).
[Downloadable!]
Daniel Parent, 2001.
"Incentive Pay in the United States: Its Determinants and Its Effects ,"
CIRANO Working Papers
2001s-04, CIRANO.
[Downloadable!]
Rabin, Matthew, 1993.
"Incorporating Fairness into Game Theory and Economics ,"
American Economic Review ,
American Economic Association, vol. 83(5), pages 1281-1302, December.
[Downloadable!] (restricted)
Uri Gneezy & Aldo Rustichini, 2000.
"Pay Enough Or Don'T Pay At All ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 115(3), pages 791-810, August.
[Downloadable!] (restricted)
Berg Joyce & Dickhaut John & McCabe Kevin, 1995.
"Trust, Reciprocity, and Social History ,"
Games and Economic Behavior ,
Elsevier, vol. 10(1), pages 122-142, July.
[Downloadable!] (restricted)
W. Bentley MacLeod & Daniel Parent, 1998.
"Job Characteristics and the Form of Compensation ,"
CIRANO Working Papers
98s-08, CIRANO.
[Downloadable!]
Robert Gibbons, 1997.
"Incentives and Careers in Organizations ,"
NBER Working Papers
5705, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989.
"Psychological games and sequential rationality ,"
Games and Economic Behavior ,
Elsevier, vol. 1(1), pages 60-79, March.
[Downloadable!] (restricted)
Kreps, David M, 1997.
"Intrinsic Motivation and Extrinsic Incentives ,"
American Economic Review ,
American Economic Association, vol. 87(2), pages 359-64, May.
[Downloadable!] (restricted)
Full
references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Shchetinin, Oleg, 2008.
"Altruism and Career Concern ,"
MPRA Paper
9414, University Library of Munich, Germany.
[Downloadable!]
Oliver Gürtler, 2008.
"Implicit contracting with a (potentially) reliable agent ,"
Journal of Economics ,
Springer, vol. 94(2), pages 177-189, July.
[Downloadable!] (restricted)
Oliver Gürtler, 2006.
"Implicit Contracts: Two Different Approaches ,"
Discussion Papers
110, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
[Downloadable!]
Guido Friebel & Wendelin Schnedler, 2007.
"Team Governance: Empowerment or Hierarchical Control ,"
IZA Discussion Papers
3143, Institute for the Study of Labor (IZA).
[Downloadable!]
Other versions:
Friebel, Guido & Schnedler, Wendelin, 2007.
"Team Governance: Empowerment of Hierarchical Control ,"
IDEI Working Papers
520, Institut d'Économie Industrielle (IDEI), Toulouse.
[Downloadable!] Guido Friebel & Wendelin Schnedler, 2007.
"Team Governance: Empowerment or Hierarchical Control ,"
Working Papers
0457, University of Heidelberg, Department of Economics, revised Oct 2007.
[Downloadable!] Friebel, Guido & Schnedler, Wendelin, 2007.
"Team Governance: Empowerment or Hierarchical Control ,"
CEPR Discussion Papers
6575, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Armin Falk & Michael Kosfeld, .
"Distrust - The Hidden Cost of Control ,"
IEW - Working Papers
iewwp193, Institute for Empirical Research in Economics - IEW.
[Downloadable!]
Other versions:
Falk, Armin & Kosfeld, Michael, 2004.
"Distrust - The Hidden Cost of Control ,"
CEPR Discussion Papers
4512, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted) Falk, Armin & Kosfeld, Michael, 2004.
"Distrust - The Hidden Cost of Control ,"
IZA Discussion Papers
1203, Institute for the Study of Labor (IZA).
[Downloadable!] Wendelin Schnedler & Radovan Vadovic, 2007.
"Legitimacy of Control ,"
IZA Discussion Papers
3013, Institute for the Study of Labor (IZA).
[Downloadable!]
Other versions:
Wendelin Schnedler & Radovan Vadovic, 2007.
"Legitimacy of Control ,"
The Centre for Market and Public Organisation
07/178, Department of Economics, University of Bristol, UK.
[Downloadable!] Schnedler, Wendelin & Vadovic, Radovan, 2007.
"Legitimacy of Control ,"
Sonderforschungsbereich 504 Publications
07-61, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
[Downloadable!] Wendelin Schnedler & Radovan Vadovic, 2007.
"Legitimacy of Control ,"
Working Papers
0450, University of Heidelberg, Department of Economics, revised Aug 2007.
[Downloadable!] Pouliakas, Konstantinos & Theodossiou, Ioannis, 2009.
"Rewarding Carrots & Crippling Sticks: Eliciting Employee Preferences for the Optimal Incentive Mix in Europe ,"
MPRA Paper
14167, University Library of Munich, Germany.
[Downloadable!]
Ellingsen, Tore & Johannesson, Magnus, 2006.
"Pride and Prejudice: The Human Side of Incentive Theory ,"
CEPR Discussion Papers
5768, C.E.P.R. Discussion Papers.
[Downloadable!] (restricted)
Other versions: Patricia Crifo & Jean-Louis Rullière, 2004.
"Incentives and Anonymity Principle: Crowding Out Toward Users ,"
CESifo Working Paper Series
CESifo Working Paper No. , CESifo Group Munich.
[Downloadable!]
Armin Falk & Michael Kosfeld, .
"The Hidden Costs of Control ,"
IEW - Working Papers
iewwp250, Institute for Empirical Research in Economics - IEW.
[Downloadable!]
Other versions:
Access and
download statistics Did you know? No RePEc service, like IDEAS, charges for the use or the display of bibliographic data.
This page was last updated on 2009-11-17.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .