We examine the effectiveness of bonuses and fines in an "inspection game" where an employer can learn the effort of a worker through costly inspection. Standard game theoretic analysis predicts that fines discourage shirking, whereas bonuses encourage shirking. In contrast, ownpayoff effects...

Recent work in experimental economics on the effectiveness of rewards and punishments for promoting cooperation mainly examines decentralized incentive systems where all group members can reward and/or punish one another. Many self-organizing groups and societies, however, concentrate the power...

We experimentally investigate a repeated "inspection game" where, in the stage game, an employee can either work or shirk and an employer simultaneously chooses to inspect or not inspect. Combined payoffs are maximized when the employee works and the employer does not inspect. However, the...

We experimentally investigate a repeated "inspection game" where, in the stage game, an employee can either work or shirk and an employer simultaneously chooses to inspect or not inspect. The unique equilibrium of the stage game is in mixed strategies with positive probabilities of...

This study uses a three-person gift-exchange game experiment to examine the impact of pay comparisons on effort behavior. We compare effort choices made in a treatment where workers' wages are secret with effort choices made in two 'public wages' treatments. The two 'public wages' treatments...

Firms regularly use incentives to motivate their employees to be more productive. However, often little attention is paid to the language used in employment contracts to describe these incentives. It may be more effective to present incentives as entitlements that can be lost by failing to reach...

Belief elicitation is an important methodological issue for experimental economists. There are two generic questions: 1) Do incentives increase belief accuracy? 2) Are there interaction effects of beliefs and decisions? We investigate these questions in the case of finitely repeated public goods...

We investigate the impact of eliciting beliefs about the average contribution of other group members in finitely repeated public goods experiments. We find that belief accuracy is significantly higher when beliefs are incentivized. The distribution of beliefs as well as the relationship between...