Advanced Search
MyIDEAS: Login to save this paper or follow this series

Altruism and Relational Incentives in the Workplace

Contents:

Author Info

  • Dur, Robert

    ()
    (Erasmus University Rotterdam)

  • Tichem, Jan

    ()
    (Erasmus University Rotterdam)

Abstract

This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The con- tract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that altruism undermines the credibility of a threat of dis- missal but strengthens the credibility of a bonus. Among others, these two mechanisms imply that higher altruism sometimes leads to higher bonuses, while lower altruism may increase productivity and players utility in equilibrium.

Download Info

If 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.
File URL: http://ftp.iza.org/dp7363.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7363.

as in new window
Length: 34 pages
Date of creation: Apr 2013
Date of revision:
Publication status: forthcoming in: Journal of Economics and Management Strategy
Handle: RePEc:iza:izadps:dp7363

Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information:
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:

Related research

Keywords: subjective performance evaluation; efficiency wages; relational contracts; incentives; spite; altruism; Nash bargaining;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Martin Brown & Armin Falk & Ernst Fehr, 2008. "Competition and Relational Contracts: The Role of Unemployment as a Disciplinary Device," Working Papers 2008-07, Swiss National Bank.
  2. Sliwka, Dirk, 2006. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," IZA Discussion Papers 2293, Institute for the Study of Labor (IZA).
  3. Martin Brown & Armin Falk & Ernst Fehr, 2004. "Relational Contracts and the Nature of Market Interactions," Econometrica, Econometric Society, Econometric Society, vol. 72(3), pages 747-780, 05.
  4. Carmichael, H Lorne, 1983. "The Agent-Agents Problem: Payment by Relative Output," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 1(1), pages 50-65, January.
  5. Grund, Christian & Sliwka, Dirk, 2002. "Envy and Compassion in Tournaments," IZA Discussion Papers 647, Institute for the Study of Labor (IZA).
  6. Campbell, Carl M, III & Kamlani, Kunal S, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(3), pages 759-89, August.
  7. Bull, Clive, 1987. "The Existence of Self-Enforcing Implicit Contracts," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 102(1), pages 147-59, February.
  8. Florian Englmaier & Stephen G. Leider, 2008. "Contractual and Organizational Structurewith Reciprocal Agents," CESifo Working Paper Series 2415, CESifo Group Munich.
  9. MacLeod, W Bentley & Malcomson, James M, 1998. "Motivation and Markets," American Economic Review, American Economic Association, American Economic Association, vol. 88(3), pages 388-411, June.
  10. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, Econometric Society, vol. 70(2), pages 737-753, March.
  11. Shchetinin, Oleg, 2010. "Altruism and Career Concerns," Working Papers in Economics, University of Gothenburg, Department of Economics 427, University of Gothenburg, Department of Economics.
  12. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
  13. Giebe, Thomas & Gürtler, Oliver, 2012. "Optimal contracts for lenient supervisors," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 81(2), pages 403-420.
  14. Robert Dur, 2008. "Gift Exchange in the Workplace: Money or Attention?," CESifo Working Paper Series 2496, CESifo Group Munich.
  15. Arjan Non, 2010. "Gift-Exchange, Incentives, and Heterogeneous Workers," Tinbergen Institute Discussion Papers 10-008/1, Tinbergen Institute, revised 31 May 2011.
  16. George Baker & Robert Gibbons & Kevin J. Murphy, 1993. "Subjective Performance Measures in Optimal Incentive Contracts," NBER Working Papers 4480, National Bureau of Economic Research, Inc.
  17. Josse Delfgaauw & Robert Dur, 2003. "Signaling and Screening of Workers' motivation," CESifo Working Paper Series 1099, CESifo Group Munich.
  18. Canice Prendergast & Robert H. Topel, 1993. "Favoritism in Organizations," NBER Working Papers 4427, National Bureau of Economic Research, Inc.
  19. Robert Gibbons, 1998. "Incentives in Organizations," NBER Working Papers 6695, National Bureau of Economic Research, Inc.
  20. Paula Cordero Salas & Brian E. Roe, 2012. "The Role of Cooperation and Reciprocity in Structuring Carbon Sequestration Contracts in Developing Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 94(2), pages 411-418.
  21. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, Econometric Society, vol. 57(2), pages 447-80, March.
  22. Amihai Glazer, 2008. "Optimal Contracts When a Worker Envies His Boss," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 24(1), pages 120-137, May.
  23. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, American Economic Association, vol. 93(3), pages 835-857, June.
  24. Bergstrom, Theodore C, 1999. " Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100.
  25. Ramon Casadesus-Masanell, 2004. "Trust in Agency," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 13(3), pages 375-404, 09.
  26. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 433-44, June.
  27. Daniel M.G. Raff & Lawrence H. Summers, 1986. "Did Henry Ford Pay Efficiency Wages?," NBER Working Papers 2101, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp7363. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.