Journal article
Endogenous incentive contracts and efficient coordination
Games and economic behavior, Vol.112, pp.78-97
11/01/2018
DOI: 10.1016/j.geb.2018.07.008
Abstract
We examine the effects of endogenous assignment to incentive contracts on worker productivity. Assignment to high performance pay via a market mechanism is roughly twice as effective as imposing the same contract exogenously. This positive effect is largely offset by a negative effect for workers that endogenously choose low performance pay. We decompose the positive effect of endogenous assignment to high performance pay into effects due to selection and strategic anticipation, and find that selection has a greater effect than strategic anticipation. We use a Reverse Sort treatment to show that the effect of selection is sufficiently strong to overcome the direct effect of lower performance pay, yielding coordination at high effort levels in spite of low incentives. (C) 2018 Elsevier Inc. All rights reserved.
Details
- Title: Subtitle
- Endogenous incentive contracts and efficient coordination
- Creators
- David J. Cooper - Florida State Univ, Dept Econ, Tallahassee, FL 32306 USAChristos A. Ioannou - Université Paris CitéShi Qi - William & Mary
- Resource Type
- Journal article
- Publication Details
- Games and economic behavior, Vol.112, pp.78-97
- DOI
- 10.1016/j.geb.2018.07.008
- ISSN
- 0899-8256
- eISSN
- 1090-2473
- Publisher
- Elsevier
- Number of pages
- 20
- Grant note
- SES-1127704 / NSF; National Science Foundation (NSF)
- Language
- English
- Date published
- 11/01/2018
- Academic Unit
- Economics
- Record Identifier
- 9984420944602771
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