We investigate wage differences between newly hired and incumbent employees. We show in a formal model that when employees care for wages as well as match-specific utility, incumbents earn less than new recruits if and only if firm-specific human capital is not too important. The existence and...

We investigate how bonus payments affect satisfaction and performance of managers in a large, multinational company. We find that falling behind a naturally occurring reference point for bonus comparisons reduces satisfaction and subsequent performance. The effects tend to be mitigated if...

We investigate the effects of inequality in wealth on the incentives to contribute to a public good when agents are inequity averse and may differ in ability. We show that equality may lead to a reduction of public good provision below levels generated by purely selfish agents. But introducing...

We examine ways of funding higher education, comparing upfront tuition fees with graduate taxes. The tax dominates, as volatility in future income is transferred from risk-averse students to the risk-neutral state. However, a double moral hazard problem arises when students’ efforts to raise...

In an experiment with professionals from the financial services sector, we investigate the impact of a team incentive scheme on the recommendation quality of investment products when advisors benefit from advising lower quality products. Experimental results reveal that, when group affiliation...

How to hire voluntary helpers? We shed new light on this question by reporting a field experiment in which we invited 2,859 students to help at the 'ESA Europe 2012' conference. Invitation emails varied non-monetary and monetary incentives to convince subjects to offer help. Students could apply...

Economists have for a long time argued that performance-based bonuses raise performance. Indeed, many firms use bonuses tied to individual performance to motivate their employees. However, there has been heated debate among human resources professionals recently, and some firms have moved away...

We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8,951 subordinate employees of a large technology firm.We first document a gender gap not only in salary levels but also in salary increases....

We present a natural field experiment on promoting pay equity through simple modifications to the salary review process involving 623 middle managers and 8,951 subordinate employees of a large technology firm. We first document a gender gap not only in salary levels but also in salary increases....

We experimentally investigate a simple version of Holmström’s career concerns model in which firms compete for agents in two consecutive periods. Profits of firms are determined by agents’ unknown ability and the effort they choose. Before making second-period wage offers firms are informed...