Firing Threats and Tenure: Incentive effects and impression management
AbstractWe study the effect of firing threats and tenure in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice more than organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure activities. Nevertheless, organizations endowed with firing threats significantly underperformed those using individual incentives. Our analysis also indicates that, in the presence of firing threats, employees engage in impression management activities in order to be seen as hard-working individuals. These results are consistent with the predictions of our theoretical model in which workers aim at signaling a high level of intrinsic motivation to increase their chance of obtaining tenure. Finally, we show that production levels dropped substantially under tenure while on-the-job leisure surged.
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Bibliographic InfoPaper provided by Chapman University, Economic Science Institute in its series Working Papers with number 13-15.
Length: 63 pages
Date of creation: 2013
Date of revision:
Firing threats; tenure; incentives; impression management;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-CBE-2013-05-22 (Cognitive & Behavioural Economics)
- NEP-HRM-2013-05-22 (Human Capital & Human Resource Management)
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