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Firing Threats and Tenure: Incentive effects and impression management

  • Brice Corgnet

    ()

    (Chapman University)

  • Roberto Hernán-Gonzalez

    ()

    (Universidad de Granada)

  • Stephen Rassenti

    (Economic Science Institute, Chapman University)

We study the effect of firing threats and tenure 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 more than organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure activities. Nevertheless, organizations endowed with firing threats significantly underperformed those using individual incentives. Our analysis also indicates that, in the presence of firing threats, employees engage in impression management activities in order to be seen as hard-working individuals. These results are consistent with the predictions of our theoretical model in which workers aim at signaling a high level of intrinsic motivation to increase their chance of obtaining tenure. Finally, we show that production levels dropped substantially under tenure while on-the-job leisure surged.

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File URL: http://www.chapman.edu/research-and-institutions/economic-science-institute/_files/WorkingPapers/corgnet-rassenti-firing-threats-and-tenure.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 13-15.

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Length: 63 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:chu:wpaper:13-15
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