Artikel
Salience bias and overwork
In this study, we enrich a standard principal-agent model with hidden action by introducing salience-biased perception on the agent's side. The agent's misguided focus on salient payoffs, which leads the agent's and the principal's probability assessments to diverge, has two effects: First, the agent focuses too much on obtaining a bonus, which facilitates incentive provision. Second, the principal may exploit the diverging probability assessments to relax participation. We show that salience bias can reverse the nature of the inefficiency arising from moral hazard; i.e., the principal does not necessarily provide insufficient incentives that result in inefficiently low effort but instead may well provide excessive incentives that result in inefficiently high effort.
- Language
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Englisch
- Bibliographic citation
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Journal: Games ; ISSN: 2073-4336 ; Volume: 13 ; Year: 2022 ; Issue: 1 ; Pages: 1-22 ; Basel: MDPI
- Classification
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Wirtschaft
- Subject
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context-dependent preferences
hidden action
moral hazard
overwork
salience theory
- Event
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Geistige Schöpfung
- (who)
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Römeis, Fabio
Herweg, Fabian
Müller, Daniel
- Event
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Veröffentlichung
- (who)
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MDPI
- (where)
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Basel
- (when)
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2022
- DOI
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doi:10.3390/g13010015
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Römeis, Fabio
- Herweg, Fabian
- Müller, Daniel
- MDPI
Time of origin
- 2022