Arbeitspapier
On the Hidden Costs of Incentive Schemes
By enriching a principal-agent model it is shown that the introduction of monetary incentives may reduce an agent?s motivation. In a first step, we allow for the possibility that some agents stick to unverifiable agreements. The larger the fraction of reliable agents, the lower powered will then be the optimal incentive scheme and fixed wages become optimal when performance measurement is costly. If social norms matter such that some agents? reliability is influenced by their beliefs on the convictions of others, high powered incentives signal that not sticking to agreements is a widespread behavior and may lead to lower effort levels.
- Language
-
Englisch
- Bibliographic citation
-
Series: IZA Discussion Papers ; No. 844
- Classification
-
Wirtschaft
Compensation Packages; Payment Methods
Personnel Economics: Compensation and Compensation Methods and Their Effects
Organizational Behavior; Transaction Costs; Property Rights
- Subject
-
incentives
intrinsic motivation
motivation crowding-out
honesty
Leistungsanreiz
Anreizvertrag
Theorie
- Event
-
Geistige Schöpfung
- (who)
-
Sliwka, Dirk
- Event
-
Veröffentlichung
- (who)
-
Institute for the Study of Labor (IZA)
- (where)
-
Bonn
- (when)
-
2003
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Sliwka, Dirk
- Institute for the Study of Labor (IZA)
Time of origin
- 2003
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