It is standard in agency theory to search for incentive-compatible mechanisms on the assumption that people care only about their own material wealth. Yet it may be useful to consider social forces in mechanism design and contract theory. We devise an experiment to explore optimal contracts in a...

The experimental study "Letting Down the Team? Social Effects of Team Incentives" by Philip Babcock and colleagues (2015) proposes that team incentives significantly enhance individual performance through social pressure and peer effects. The findings suggest that individuals are motivated by a...