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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...
Persistent link: https://www.econbiz.de/10012778057
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...
Persistent link: https://www.econbiz.de/10012716264
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Uncertainty about the future preferences of the government may induce policy makers to run excessive budget deficits. As a solution to this problem, economists have proposed to impose a binding debt rule. In this paper we argue that a binding debt rule does not eliminate the distortions due to...
Persistent link: https://www.econbiz.de/10005560973
Uncertainty about the future preferences of the government may induce policy makers to run excessive budget deficits. As a solution to this problem, economists have proposed to impose a binding debt rule. In this paper we argue that a binding debt rule does not eliminate the distortions due to...
Persistent link: https://www.econbiz.de/10005137082
Uncertainty about the future preferences of the government may induce policy makers to run excessive budget deficits. As a solution to this problem, economists have proposed to impose a binding debt rule. In this paper we argue that a binding debt rule does not eliminate the distortions due to...
Persistent link: https://www.econbiz.de/10011255856
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...
Persistent link: https://www.econbiz.de/10005321870
Persistent link: https://www.econbiz.de/10005331645
This paper studies the selection of information collecting agents by policy makers in the light of two agency problems. First, it is often hard to ascertain how much effort agents have put in acquiring information. Second, when agents have an interest in the policy outcome, they may manipulate...
Persistent link: https://www.econbiz.de/10005392922