Reciprocity and incentive pay in the workplace

Arbeitspapier

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We empirically examine these predictions using data from the German Socio-Economic Panel. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4782

Classification and Topics

• Classification: Wirtschaft ; Economics of Contract: Theory ; Labor Contracts ; Personnel Economics: Firm Employment Decisions; Promotions ; Personnel Economics: Compensation and Compensation Methods and Their Effects ; Personnel Economics: Labor Management ; Personnel Economics: Labor Contracting Devices
• Subject: Reciprocity ; social exchange ; incentive contracts ; double moral hazard ; GSOEP ; Anreizvertrag ; Verantwortung ; Moral Hazard ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dur, Robert ; Non, Arjan ; Roelfsema, Hein
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/36039
• Last update: 10.03.2025, 11:44 AM CET