This paper investigates the optimal design of incentives when agents distort probabilities. We show that the type of …, the strength of the incentives included in the optimal contract, and the location of incentives on the output space. Our … framework demonstrates that incorporating descriptively-valid theories of risk in a principal-agent setting leads to incentive …

experiments. Contrary to the traditional view of expected utility theory, the choices can be explained in large part by previous … outcomes experienced during the game. Risk aversion decreases after earlier expectations have been shattered by unfavorable … outcomes or surpassed by favorable outcomes. Our results point to reference-dependent choice theories such as prospect theory …

risk by overrating the agent's performance. Second, I show that by screening for one supervisor type, firms can incentivize …

This paper examines the effect of incentives on the performance of darts players. We analyze four data sets comprising … risk considerations and the behavior of others. We find that amateur and youth players perform better under moderately … higher incentives, but choke when the incentives are really high. Professional players similarly display better performance …

Incentives based on esteem, honor and shame are increasingly popular and easy to use due to modern surveillance … Tirole (2011) to explore the effect of esteem-based incentives and their interaction with traditional monetary incentives. We … show that esteem-based incentives can indeed lead to a loss of control by generating multiple equilibria, some of which …

incentives - motivate a worker by adopting leadership styles that differ in their non-monetary consequences for the worker's well …