By incentive reversal we refer to situations in which an increase in rewards for all agents results in fewer agents exerting effort. We show that externalities among peers may give rise to such intriguing situations even when all agents are fully rational. We provide a necessary and sufficient condition for the organizational technology so that it will be susceptible to incentive reversal. The condition implies that some degree of complementarity is enough to allow incentive reversal. (JEL D23, D82, M54)
(This abstract was borrowed from another version of this item.)
References listed on IDEAS
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- Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-36, May.
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IEW - Working Papers
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"Incentives and Discrimination,"
Discussion Paper Series
dp313, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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- Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough Or Don'T Pay At All," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 791-810, August.
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Harvard Institute of Economic Research Working Papers
1757, Harvard - Institute of Economic Research.
- repec:rje:randje:v:37:y:2006:2:p:376-390 is not listed on IDEAS
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