AbstractBy incentive reversal we refer to situations in which an increase in rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition for the organizational technology so that it will be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal. (JEL D23, D82, M54)
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by David K. Levine in its series Levine's Working Paper Archive with number 843644000000000241.
Date of creation: 22 Jul 2007
Date of revision:
Contact details of provider:
Web page: http://www.dklevine.com/
Other versions of this item:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
This paper has been announced in the following NEP Reports:
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.:
- Eyal Winter, 2004.
"Incentives and Discrimination,"
American Economic Review,
American Economic Association, vol. 94(3), pages 764-773, June.
- Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-36, May.
- Gneezy, U. & Rustichini, A., 1998.
"Pay Enough - Or Don't Pay at All,"
1998-57, Tilburg University, Center for Economic Research.
- Sandeep Baliga & Tomas Sjostrom, 1996.
"Decentralization and Collusion,"
Harvard Institute of Economic Research Working Papers
1757, Harvard - Institute of Economic Research.
- Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro'i, 2011.
"Can Higher Bonuses Lead to Less Effort? Incentive Reversal in Teams,"
IZA Discussion Papers
5501, Institute for the Study of Labor (IZA).
- Esteban F. Klor & Sebastian Kube & Eyal Winter & Ro'i Zultan, 2011. "Can Higher Bonuses Lead to Less E ort? Incentive Reversal in Teams," Levine's Working Paper Archive 786969000000000073, David K. Levine.
- Eva-Maria Steiger & Ro'i Zultan, 2011.
"See No Evil: Information Chains and Reciprocity in Teams,"
Jena Economic Research Papers
2011-040, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Roi Zultan & Eva-Maria Steiger, 2011. "See No Evil: Information Chains and Reciprocity in Teams," Working Papers 1108, Ben-Gurion University of the Negev, Department of Economics.
- Sven Fischer & Eva-Maria Steiger, 2009. "Exploring the Effects of Unequal and Secretive Pay," Jena Economic Research Papers 2009-107, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Bag, Parimal Kanti & Pepito, Nona, 2011.
"Double-edged transparency in teams,"
Journal of Public Economics,
Elsevier, vol. 95(7-8), pages 531-542, August.
- Eyal Winter & Ignacio Garcia-Jurado & Jose Mendez-Naya & Luciano Mendez-Naya, 2009. "Mental Equilibrium and Rational Emotions," Discussion Paper Series dp521, The Center for the Study of Rationality, Hebrew University, Jerusalem.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David K. Levine).
If references are entirely missing, you can add them using this form.