IDEAS home Printed from
   My bibliography  Save this article

Emotions and Compensation


  • Matthias Kräkel


I introduce a concept of emotions that emerge when workers evaluate their individual performances or when they compare their own performances with those of co-workers. I analyze the interplay of emotions and incentives by focusing on a certain scheme of worker compensation that is frequently used in practice: a piece-rate system. My findings show that standard results of compensation theory significantly change when introducing emotions. I identify certain conditions under which emotions lead to additional incentives and under which the employer benefits from emotional workers, and I sketch the impact of risk aversion on the interplay of emotions and incentives, and the influence of a worker’s success probability on the intensity of his emotions.

Suggested Citation

  • Matthias Kräkel, 2008. "Emotions and Compensation," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 60(2), pages 145-159, April.
  • Handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:145-159

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Paul Nightingale & Alister Scott, 2007. "Peer review and the relevance gap: Ten suggestions for policy-makers," Science and Public Policy, Oxford University Press, vol. 34(8), pages 543-553, October.
    2. Oliver Fabel & Miriam Hein & Robert Hofmeister, 2008. "Research Productivity in Business Economics: An Investigation of Austrian, German and Swiss Universities," German Economic Review, Verein für Socialpolitik, vol. 9, pages 506-531, November.
    3. Cherchye, L. & Abeele, P. Vanden, 2005. "On research efficiency: A micro-analysis of Dutch university research in Economics and Business Management," Research Policy, Elsevier, vol. 34(4), pages 495-516, May.
    4. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    5. Moed, H. F. & Burger, W. J. M. & Frankfort, J. G. & Van Raan, A. F. J., 1985. "The use of bibliometric data for the measurement of university research performance," Research Policy, Elsevier, vol. 14(3), pages 131-149, June.
    6. Bruno S. Frey & Katja Rost, 2010. "Do rankings reflect research quality?," Journal of Applied Economics, Universidad del CEMA, vol. 13, pages 1-38, May.
    7. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    8. Joao Ricardo Faria, 2000. "The Game Academics Play: Editors Versus Authors," Working Paper Series 105, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
    9. Kaufman, George G, 1984. " Rankings of Finance Departments by Faculty Representation on Editorial Boards of Professional Journals: A Note," Journal of Finance, American Finance Association, vol. 39(4), pages 1189-1197, September.
    10. Chamley, Christophe & Gale, Douglas, 1994. "Information Revelation and Strategic Delay in a Model of Investment," Econometrica, Econometric Society, vol. 62(5), pages 1065-1085, September.
    11. Frey, Bruno S, 2003. "Publishing as Prostitution?--Choosing between One's Own Ideas and Academic Success," Public Choice, Springer, vol. 116(1-2), pages 205-223, July.
    12. Partha, Dasgupta & David, Paul A., 1994. "Toward a new economics of science," Research Policy, Elsevier, vol. 23(5), pages 487-521, September.
    13. Bell, John G & Seater, John J, 1978. "Publishing Performance: Departmental and Individual," Economic Inquiry, Western Economic Association International, vol. 16(4), pages 599-615, October.
    14. Rigby, J. & Edler, J., 2005. "Peering inside research networks: Some observations on the effect of the intensity of collaboration on the variability of research quality," Research Policy, Elsevier, vol. 34(6), pages 784-794, August.
    15. Michael Bräuninger & Justus Haucap, 2003. "Reputation and Relevance of Economics Journals," Kyklos, Wiley Blackwell, vol. 56(2), pages 175-197, May.
    16. Coats, A W, 1971. "The Role of Scholarly Journals in the History of Economics: An Essay," Journal of Economic Literature, American Economic Association, vol. 9(1), pages 29-44, March.
    17. repec:spr:scient:v:60:y:2004:i:2:d:10.1023_b:scie.0000027794.98854.f6 is not listed on IDEAS
    18. Starbuck, William H., 2009. "The constant causes of never-ending faddishness in the behavioral and social sciences," Scandinavian Journal of Management, Elsevier, vol. 25(1), pages 108-116, March.
    19. Tom Coupé, 2003. "Revealed Performances: Worldwide Rankings of Economists and Economics Departments, 1990-2000," Journal of the European Economic Association, MIT Press, vol. 1(6), pages 1309-1345, December.
    20. Arthur M. Diamond Jr., 1986. "What is a Citation Worth?," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 200-215.
    21. Johnes, Geraint, 1988. "Determinants of research output in economics departments in British universities," Research Policy, Elsevier, vol. 17(3), pages 171-178, June.
    22. Nederhof, A. J. & van Raan, A. F. J., 1993. "A bibliometric analysis of six economics research groups: A comparison with peer review," Research Policy, Elsevier, vol. 22(4), pages 353-368, August.
    23. Clive Beed & Cara Beed, 1996. "Measuring the Quality of Academic Journals: The Case of Economics," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 18(3), pages 369-396, March.
    24. Laband, David N & Piette, Michael J, 1994. "The Relative Impacts of Economics Journals: 1970-1990," Journal of Economic Literature, American Economic Association, vol. 32(2), pages 640-666, June.
    25. Liebowitz, S J & Palmer, J P, 1984. "Assessing the Relative Impacts of Economic Journals," Journal of Economic Literature, American Economic Association, vol. 22(1), pages 77-88, March.
    26. repec:spr:scient:v:62:y:2005:i:1:d:10.1007_s11192-005-0007-7 is not listed on IDEAS
    27. Nelson, Richard R., 2004. "The market economy, and the scientific commons," Research Policy, Elsevier, vol. 33(3), pages 455-471, April.
    28. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 797-817.
    29. Butler, Linda, 2003. "Explaining Australia's increased share of ISI publications--the effects of a funding formula based on publication counts," Research Policy, Elsevier, vol. 32(1), pages 143-155, January.
    30. Robert Hofmeister & Heinrich W. Ursprung, 2008. "Das Handelsblatt Ökonomen-Ranking 2007: Eine kritische Beurteilung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 254-266, August.
    31. Alberto Baccini & Lucio Barabesi, 2008. "Interlocking Editorship. A Network Analysis of the Links Between Economic Journals," Department of Economics University of Siena 532, Department of Economics, University of Siena.
    32. Melody Lo & M.C. Sunny Wong & Franklin G. Mixon Jr, 2008. "Ranking Economics Journals, Economics Departments, and Economists Using Teaching-Focused Research Productivity," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 894-906, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ying Yang & Niladri Syam & James Hess, 2013. "Thrill of victory and agony of defeat: Emotional rewards and sales force compensation," Quantitative Marketing and Economics (QME), Springer, vol. 11(4), pages 379-402, December.

    More about this item


    Emotions; Incentives; Piece Rates; Worker Compensation;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sbr:abstra:v:60:y:2008:i:2:p:145-159. 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: (sbr). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.