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Firing threats: Incentive effects and impression management

Author

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  • Corgnet, Brice
  • Hernán-González, Roberto
  • Rassenti, Stephen

Abstract

We study the effect of firing threats in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice as much as organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure. Nevertheless, organizations endowed with firing threats underperformed those using individual incentives. In the presence of firing threats, employees engage in impression management activities to be seen as hard-working individuals in line with our model. Finally, production levels dropped substantially when the threat of being fired was removed, whereas on-the-job leisure surged.

Suggested Citation

  • Corgnet, Brice & Hernán-González, Roberto & Rassenti, Stephen, 2015. "Firing threats: Incentive effects and impression management," Games and Economic Behavior, Elsevier, vol. 91(C), pages 97-113.
  • Handle: RePEc:eee:gamebe:v:91:y:2015:i:c:p:97-113
    DOI: 10.1016/j.geb.2015.02.015
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    References listed on IDEAS

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    1. repec:eee:eecrev:v:103:y:2018:i:c:p:125-149 is not listed on IDEAS

    More about this item

    Keywords

    Firing threats; Incentives; Impression management;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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