Perks: Contractual Arrangements to Restrain Moral Hazard
AbstractPerks are a commodity bundle offered by an employer to an employee. They are used to directly control an employee's consumption. Consuming certain goods increases the marginal disutility of non-contractible effort. Lower consumption of such goods will make it less costly to induce an employee to put in high effort. To compensate for the decrease in such goods, an employer gives luxurious perks. By "luxurious" I mean that per-dollar marginal utilities of these perks are lower than those of other goods. This model explains the existence of perks such as box seat tickets and club memberships, which neither save tax nor enter the production function. Also, perks can be more luxurious at an unsuccessful outcome than at a successful outcome, and an employee with a more successful history receives more perks.
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 University of Essex, Department of Economics in its series Economics Discussion Papers with number 650.
Date of creation: 28 Feb 2008
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-01 (All new papers)
- NEP-BEC-2008-03-01 (Business Economics)
- NEP-CTA-2008-03-01 (Contract Theory & Applications)
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.:
- Rogerson, William P, 1985. "Repeated Moral Hazard," Econometrica, Econometric Society, vol. 53(1), pages 69-76, January.
- Bengt Holmstrom, 1997.
"Moral Hazard and Observability,"
Levine's Working Paper Archive
1205, David K. Levine.
- Anthony Marino & Jan Zabojnik, 2006.
"Work-Related Perks, Agency Problems, and Optimal Incentive Contracts,"
1107, Queen's University, Department of Economics.
- Anthony M. Marino & Ján Zábojník, 2008. "Work-related perks, agency problems, and optimal incentive contracts," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 565-585.
- Mariano Tommasi & Federico Weinschelbaum, 2007.
"Principal-Agent Contracts under the Threat of Insurance,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 163(3), pages 379-393, September.
- Mariano Tommasi & Federico Weinschelbaum, 2004. "Principal-Agents Contracts Under the Threat of Insurance," Working Papers 69, Universidad de San Andres, Departamento de Economia, revised Apr 2004.
- Alberto Bennardo & Pierre-Andre Chiappori, 2003.
"Bertrand and Walras Equilibria Under Moral Hazard,"
Levine's Working Paper Archive
618897000000000748, David K. Levine.
- Alberto Bennardo & P.A. Chiappori, 2002. "Bertrand and Walras equilibria under moral hazard," CSEF Working Papers 87, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Bennardo, Alberto & Chiappori, Pierre-André, 2002. "Bertrand and Walras Equilibria Under Moral Hazard," CEPR Discussion Papers 3650, C.E.P.R. Discussion Papers.
- Grossman, Sanford J & Hart, Oliver D, 1983. "Implicit Contracts under Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 123-56, Supplemen.
- Raghuram Rajan & Julie Wulf, 2004.
"Are Perks Purely Managerial Excess?,"
NBER Working Papers
10494, National Bureau of Economic Research, Inc.
- Yermack, David, 2006. "Flights of fancy: Corporate jets, CEO perquisites, and inferior shareholder returns," Journal of Financial Economics, Elsevier, vol. 80(1), pages 211-242, April.
- Fischer, Paul E, 1992. " Optimal Contracting and Insider Trading Restrictions," Journal of Finance, American Finance Association, vol. 47(2), pages 673-94, June.
- Paul Oyer, 2005. "Salary or Benefits?," NBER Working Papers 11817, National Bureau of Economic Research, Inc.
- In-Uck Park, 2004. "Moral Hazard Contracting and Private Credit Markets," Econometrica, Econometric Society, vol. 72(3), pages 701-746, 05.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Essex Economics Web Manager).
If references are entirely missing, you can add them using this form.