Arbeitspapier
Long-Term Employment Relations when Agents are Present Biased
We analyze how agents’ present bias affects optimal contracting in an infinite-horizon employment setting. The principal maximizes profits by offering a menu of contracts to naive agents: a virtual contract - which agents plan to choose in the future - and a real contract which they end up choosing. This virtual contract motivates the agent and allows the principal to keep the agent below his outside option. Moreover, under limited liability, implemented effort can be inefficiently high. With a finite time horizon, the degree of exploitation of agents decreases over the life-cycle. While the baseline model abstracts from moral hazard, we show that the result persists also when allowing for non-contractible effort.
- Sprache
-
Englisch
- Erschienen in
-
Series: CESifo Working Paper ; No. 6159
- Klassifikation
-
Wirtschaft
Firm Behavior: Theory
Wage Level and Structure; Wage Differentials
Personnel Economics: Compensation and Compensation Methods and Their Effects
- Thema
-
employment relations
dynamic contracting
present bias
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Englmaier, Florian
Fahn, Matthias
Schwarz, Marco A.
- Ereignis
-
Veröffentlichung
- (wer)
-
Center for Economic Studies and ifo Institute (CESifo)
- (wo)
-
Munich
- (wann)
-
2016
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Englmaier, Florian
- Fahn, Matthias
- Schwarz, Marco A.
- Center for Economic Studies and ifo Institute (CESifo)
Entstanden
- 2016
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