By enriching a principal-agent model it is shown that the introduction of monetary incentives may reduce an agent … convictions of others, high powered incentives signal that not sticking to agreements is a widespread behavior and may lead to …

the loss due to the lower quality. The anticipation of this effect leads to reduced ex ante incentives for the supplier …?s management to raise quality. A spin-off may therefore be beneficial as it strengthens incentives. Costs and benefits of vertical …

incentives as well as the puzzling incompleteness of many economic contracts. …

reasonably approximate real-life decision makers? behavior. Testing this theory with field data is difficult since typically …

subordinate then is affected by the outcome of the task and he therefore has strong incentives to contribute to its success. There …

of the typical American firm. Variable pay is usually touted as a way to provide incentives to managers whose interests …

During the last two decades economists have made much progress in understanding incentives, contracts and organisations … effects of incentives. Economists may fail to understand the levels and the changes in behaviour if they neglect motives like … the desire to reciprocate or the desire to avoid social disapproval. We show that monetary incentives may backfire and …

data. Factors emphasized in the economic theory of agency, notably risk aversion, also shape pay policies but these factors …