We study the relation between formal incentives and social exchange in organizations where employees work for several managers and reciprocate a manager's attention with higher effort. To this end we develop a common agency model with two-sided moral hazard. We show that when effort is...

A worker's utility may increase with his income, but envy can make his utility decline with his employer's income. This article uses a principal-agent model to study profit-maximizing contracts when a worker envies his employer. Envy tightens the worker's participation constraint and so calls...

Abstract: Field-experimental studies have shown that people litter more in more littered environments.Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may...

Abstract: Field-experimental studies have shown that people litter more in more littered environments. Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may...

Abstract: Field-experimental studies have shown that people litter more in more littered environments. Inspired by these findings, many cities around the world have adopted policies to quickly remove litter. While such policies may avoid that people follow the bad example of litterers, they may...

This paper studies the interaction between trade unions, which set wages, and a policymaker, who decides on the level of unemployment benefits and taxes. If the policymaker cannot commit to future policies, taxes and benefits are excessively high in equilibrium. Moreover, employment and output...

Using a simple game-theoretical model, this paper analyzes the role of policy advisers in the policy-making process. We show that policy makers are inclined to appoint advisers whose preferences coincide with their own preferences. Furthermore, we show that policy makers are biased towards...