Monitoring and Pay: An Experiment on Contract Design with Endogenous Monitoring

Konferenzbeitrag

We implement a laboratory experiment in which a principal has to decide on monitoring intensity and pay to investigate whether they are complements or substitutes. Wage level, monitoring intensity, and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, theoretically monitoring and pay should be complements. The between-treatment variation in our experiment is qualitatively in line with the normative prediction of the model under standard assumptions. Also the subject-specific variation indicates that monitoring and pay are considered as complements. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the principal to only rely on the reciprocity of his agents.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Incentive Systems ; No. D04-V1

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Wage Level and Structure; Wage Differentials ; Labor Contracts

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dittrich, Dennis A. V. ; Kocher, Martin G.
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/100580
• Last update: 10.03.2025, 11:43 AM CET