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Rewarding Idleness

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  • Andrea Canidio
  • Thomas Gall

Abstract

Market wages reflect expected productivity by using signals of past performance and past experience. These signals are generated at least partially on the job and create incentives for agents to choose high-profile and highly visible tasks. If agents have private information about the profitability of different tasks, firms may wish to prevent over- investment in visible tasks by increasing their opportunity costs. Firms can do so, for instance, by using employee perks. Heterogeneity in employee types induces substantial diversity in organizational and contractual choices, particularly regarding the extent to which conspicuous activities are tolerated or encouraged, the use of employee perks, and contingent wages

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Bibliographic Info

Paper provided by Department of Economics, Central European University in its series CEU Working Papers with number 2012_14.

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Date of creation: 12 Sep 2012
Date of revision: 12 Sep 2012
Handle: RePEc:ceu:econwp:2012_14

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  1. Takeovers: an agency problem?
    by chris dillow in Stumbling and Mumbling on 2012-10-19 13:16:07
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Cited by:
  1. Weinschenk, Philipp, 2013. "Compensation, perks, and welfare," Economics Letters, Elsevier, vol. 120(1), pages 67-70.

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