An important aspect in determining the effectiveness of gift exchange relations in labor markets is the ability of the worker to “repay the gift” to the employer. To test this hypothesis, we conduct a real effort laboratory experiment where we vary the wage and the effect of the worker's...

Recent laboratory evidence suggests that social preferences may affect contractual outcomes under moral hazard. In accordance with previous research, this paper uses written personality tests for job candidates as a proxy for whether firms care about personality traits of employees, in...

We conduct a field experiment where we vary both the presence of a gift exchange wage and the effect of the worker’s effort on the manager’s payoff. The results indicate a strong complementarity between the initial wage gift and the agent’s ability to “repay the gift.” We collect...

Empirically, compensation systems generate substantial effort despite weak monetary incentives. We consider reciprocal motivations as a source of incentives. We solve for the optimal contract in the basic principal-agent problem and show that reciprocal motivations and explicit performance-based...

A large and growing literature has demonstrated that explicit incentives, such as enforceable contracts, can lead agents to withhold effort. We investigate when this behavioral result arises. In an extensive laboratory experiment, we find that imposing control through an enforceable contract is...

We test the predictions of a behavioral model of transactional electoral politics in the context of a randomized anti-vote-selling intervention in the Philippines. We model selling one’s vote as a temptation good: it creates positive utility for the future self at the moment of voting, but not...

We analyze a contest between two groups where group members have differing valuations for the contested rent. Generically the pivotal group member with the median valuation of the rent will not act himself but will want to send a group member that has preferences different to her own into the...

The corporate finance literature documents that managers tend to overinvest into physical assets. A number of theoretical contributions have aimed to explain this stylized fact, most of them focussing on a fundamental agency problem between shareholders and managers. The present paper shows that...

Recent laboratory evidence suggests that social preferences may affect contractual outcomes under moral hazard. In accordance with previous research, this paper uses written personality tests for job candidates as a proxy for whether firms care about personality traits of employees, in...

We provide an overview over different literature streams that aim at explaining the origin of persistent productivity differences across organizations by variation in the use of management practices. We focus on human resource management (HRM) practices, document gaps in the literature, and show...