Social Norms and Optimal Incentives in Firms
AbstractThis paper deals with the interplay between economic incentives and social norms in firms. We outline a simple model of team production and provide preliminary results on linear incentive schemes in the presence of a social norm that may cause multiple equilibria. The effect of the social norm on the optimal bonus rate is discussed, as well as the effectiveness of temporary changes in the bonus rate as a means to move a firm from a bad to a good equilibrium.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 565.
Length: 12 pages
Date of creation: 08 Oct 2001
Date of revision:
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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Social Norms; Incentives; Contracts;
Other versions of this item:
- S. Huck & D. Kübler & J. Weibull, 2002. "Social norms and optimal incentives in firms," SFB 373 Discussion Papers 2002,11, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Huck, Steffen & Kübler, Dorothea & Weibull, Jörgen, 2001. "Social norms and optimal incentives in firms," Working Paper Series in Economics and Finance 466, Stockholm School of Economics.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-10-16 (All new papers)
- NEP-CDM-2001-10-16 (Collective Decision-Making)
- NEP-EVO-2001-10-16 (Evolutionary Economics)
- NEP-MIC-2001-10-16 (Microeconomics)
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