We consider a repeated moral hazard problem, where both the principal and the wealth-constrained agent are risk-neutral. In each of two periods, the agent can exert unobservable effort, leading to success or failure. Incentives provided in the second period act as carrot and stick for the first...

We study optimal incentives in a principal-agent problem in which the agent's outside option is determined endogenously in a competitive labor market. In equilibrium, strong performance increases the agent's market value. When this value becomes sufficiently high, the threat of the agent's...

This paper examines the impact of social preferences on the choice between individual production and team production. An inequity-averse principal can hire a single or a team of two agents to work on a single project. The agents are inequity-averse with respect to the principal. In this...

This paper explores the rationality of status concerns amongst co-workers and the impact of such rational status concerns on a firm's profits. We find that it is individually rational for agents in a firm to develop and exhibit status concerns. Workers are, by their choices of status concerns,...

This study critically examines Dai and Jerath's (2013) influential paper on incentive schemes in inventory management, revealing a substantial flaw: an equilibrium fails to exist for a broad set of parameters allowed by the paper. Illustrated through a specific example, we identify fundamental...

Experimental economics is used to investigate two important hypotheses proposed in the economics literature on tournaments. Specifically, we test for a hypothesized “disincentives effect” which can occur in tournaments with mixed ability agents. We also test the well known hypothesis that,...

This paper studies how a firm fosters formal and informal interactions among its employees to create a collective identity and positively influence effort. We develop a model where employees have both a personal and a social ideal for effort, and where the firm can make its workforce more...

In this article, we propose to view the firm as a locus of socialization in which employees with heterogeneous work attitudes can be motivated and coordinated through adherence to a social ideal of effort. We develop an agency model in which employees have both a personal and a social ideal of...

A ranking of a variety of incentive devices used by firms according to their perceived effectiveness by employees is identified. The determinants of employee incentive preferences are also investigated, suggesting a ‘menu’ of conditions under which an organization’s personnel policies will...

This study examines whether firms incorporated in mainland China benefit from cross-listing in Hong Kong, China. The Hong Kong Stock Market has more stringent rules regarding corporate governance and a better system of investor protection than the mainland market. Hong Kong companies generally...