We study the effect of leadership on incentive contracts in a moral-hazard framework. In our model, agents are allowed to choose the timing of their actions. The agents may choose their effort levels simultaneously or sequentially. We show that relative performance evaluation leads to a subgame...

Individuals who compete in a contest-like situation (for example, in sports, in promotion tournaments, or in an appointment contest) may have an incentive to illegally utilize resources in order to improve their relative positions. We analyze such doping or cheating within a tournament game...

We introduce a concept of emotions that emerge when workers compare their own performance with a given standard or with the performances of co-workers. Assuming heterogeneity among the workers the interplay of emotions and incentives is analysed by focusing on three incentive schemes that are...

This paper develops and tests a unique model of asymmetric employer learning. The model relaxes the informational assumptions used in most of the previous literature and assumes firms compete for workers through bidding wars. As a result, outside firms can profitably compete for an employed...

We analyse top management public sector pay using a panel data of university Vice Chancellors (VC) in UK. We assess how institutional performance, hierarchical effects, and personal characteristics determine VC pay. VC personal data covers personal details, qualifications and career history,...

I introduce a concept of emotions that emerge when workers evaluate their individual performances or when they compare their own performances with those of co-workers. I analyze the interplay of emotions and incentives by focusing on a certain scheme of worker compensation that is frequently...

While theorists differ sharply on the expected economic impact of stock options, typically empirical work has found a positive association between option schemes and firm productivity. However, existing data are limited and may not enable reliable investigation of the productivity effects of...

Consider a principal-agent relationship in which more effort by the agent raises the likelihood of success. Does rewarding success, i.e., paying a bonus, increase effort in this case? I find that bonuses have not only an incentive but also an income effect. Overall, bonuses paid for success may...

In recent decades, most developed countries have experienced a simultaneous increase in income inequality and management compensation. In this paper, we study the relation between management compensation and firm-level income dynamics in a general equilibrium model. Empirical estimation, of the...

Many street-level bureaucrats (such as caseworkers) have the dual task of helping some clients, while sanctioning others. We develop a model of such a street-level bureaucracy and study the implications of its personnel policy on the self-selection and allocation decisions of agents who differ...