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Reciprocity and Incentive Pay in the Workplace

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Author Info

  • Dur, Robert

    () (Erasmus University Rotterdam)

  • Non, Arjan

    () (ROA, Maastricht University)

  • Roelfsema, Hein

    () (Utrecht School of Economics)

Abstract

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We empirically examine these predictions using data from the German Socio-Economic Panel. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4782.

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Length: 27 pages
Date of creation: Feb 2010
Date of revision:
Publication status: published in: Journal of Economic Psychology, 2010, 31(4), 676-686
Handle: RePEc:iza:izadps:dp4782

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Related research

Keywords: reciprocity; social exchange; GSOEP; double moral hazard; incentive contracts;

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References

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Citations

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Cited by:
  1. Non, Arjan, 2012. "Gift-exchange, incentives, and heterogeneous workers," Games and Economic Behavior, Elsevier, vol. 75(1), pages 319-336.
  2. Christiane Bradler & Robert Dur & Susanne Neckermann & Arjan Non, 2013. "Employee Recognition and Performance: A Field Experiment," Tinbergen Institute Discussion Papers 13-038/VII, Tinbergen Institute.
  3. Kvaløy, Ola & Schöttner, Anja, 2012. "Incentives to Motivate," UiS Working Papers in Economics and Finance 2012/15, University of Stavanger.
  4. Bradler C. & Non J.A. & Neckermann S. & Dur R., 2013. "Employee recognition and performance: A field experiment," Research Memoranda 004, Maastricht : ROA, Research Centre for Education and the Labour Market.
  5. Robert Dur & Robin Zoutenbier, 2012. "Intrinsic Motivations of Public Sector Employees: Evidence for Germany," Tinbergen Institute Discussion Papers 12-135/VII, Tinbergen Institute.
  6. Mathilde Almlund & Angela Lee Duckworth & James J. Heckman & Tim D. Kautz, 2011. "Personality Psychology and Economics," NBER Working Papers 16822, National Bureau of Economic Research, Inc.
  7. Dur, Robert & Non, Arjan & Roelfsema, Hein, 2010. "Reciprocity and incentive pay in the workplace," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 676-686, August.
  8. Christiane Bradler & Robert Dur & Susanne Neckermann & Arjan Non, 2013. "Employee Recognition and Performance: A Field Experiment," Tinbergen Institute Discussion Papers 13-038/VII, Tinbergen Institute.
  9. Thomas Cornelissen & John S. Heywood & Uwe Jirjahn, 2010. "Profit Sharing and Reciprocity: Theory and Survey Evidence," SOEPpapers on Multidisciplinary Panel Data Research 292, DIW Berlin, The German Socio-Economic Panel (SOEP).

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