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Work-related Perks, Agency Problems, And Optimal Incentive Contracts

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  • Anthony M. Marino

    (USC)

  • Jan Zabojnik

Abstract

Work‐related perks, such as corporate jets, nice offices, and so forth, improve the tradeoff between incentives and insurance that determines the optimal incentive contract. We show that (i) such perks may be offered even if their direct consumption benefits are offset by their costs; (ii) they will be offered for free; (iii) agents in more uncertain production environments will receive more perks; (iv) senior executives should receive more perks; and (v) better corporate governance can lead to more perk consumption by CEOs. Our analysis also offers insights into firms' decisions about how much autonomy they should grant to their employees.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Anthony M. Marino & Jan Zabojnik, 2006. "Work-related Perks, Agency Problems, And Optimal Incentive Contracts," Working Paper 1107, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1107
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1107.pdf
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    More about this item

    Keywords

    Job Perks; Agency Problems; Optimal Incentive Contracts;
    All these keywords.

    JEL classification:

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

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    This paper has been announced in the following NEP Reports:

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