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The Firm as an Incentive System

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  • Holmstrom, Bengt
  • Milgrom, Paul

Abstract

The authors explore the twin hypotheses (1) that high-performance incentives, worker ownership of assets, and worker freedom from direct controls are complementary instruments for motivating workers, and (2) that such instruments can be expected to covary positively in cross-sectional data. They also relate their conclusions to empirical evidence, particularly that on the organization, compensation, and management of sales forces. Copyright 1994 by American Economic Association.

Suggested Citation

  • Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-991, September.
  • Handle: RePEc:aea:aecrev:v:84:y:1994:i:4:p:972-91
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