This paper empirically studies the extent to which career concerns as part of a typical contract offer influence employees’ work performance in a Japanese auto dealership firm. Since career movements and base wage adjustments rely on performance evaluation over time, we develop a dynamic...

Most research linking compensation to strategy relies on agency theory economics and focuses on executive pay. We instead focus on the strategic compensation of non-executive employees, arguing that while agency theory provides a useful framework for analyzing compensation, it fails to consider...

Behavioral economists have proposed that incentive contracts result in higher productivity when bonuses are “loss framed”—prepaid then clawed back if targets are unmet. We test this claim in a large-scale field experiment. Holding financial incentives fixed, we randomized the pre- or...

Behavioral economists have proposed that loss-averse employees increase productivity when bonuses are "loss framed"--prepaid then clawed back if targets are unmet. We theoretically document that loss framing raises incentives for costly risk mitigation and for inefficient multitasking,...