Sabotage in Tournaments: Evidence from a Laboratory Experiment Although relative performance schemes are pervasive in organizations reliable empirical data on induced sabotage behavior is almost non-existent. We study sabotage in tournaments in a controlled laboratory experiment and are able to confirm one of the key insights from theory: effort and sabotage increase with the wage spread. Addit...

Labour Market Regulation in the EU-15: Causes and Consequences – A Survey Why should floors be set under wages and working conditions by labour market regulations? This paper finds that efficiency arguments are questionable, because of the disemployment effects of strict regulation. Regulation is better explained in terms of the choices of the employed semiand unskilled worker group. This group...

We study whether boards of directors concentrate on performance near compensation Ž . decision times rather than providing consistent incentives for chief executive officers CEO throughout the fiscal year. We show empirically that managers can profit by moving sales revenue among fiscal quarters. Though this may suggest that boards use short-term trends when determining rewards, we find evidenc...

Using hand-collected data, we document the details of the ex-ante severance contract and the ex-post separation pay given to S&P500 CEOs upon departing from their company. We analyze for the determinants of whether or not a departing CEO receives separation pay in excess of her severance contract. This excess separation pay is on average, $8 million, which amounts to close to 242% of a CEO’s an...

We develop a model of nonstationary relational contracts in order to study internal wage dynamics. Workers are heterogenous and each workers’ ability is both private information and fixed for all time. Learning therefore occurs within employment relationships. The inferences, however, are confounded by moral hazard: the distribution of output is determined by both the worker’s type and by his u...

Reasons for Wage Rigidity in Germany This study investigates institutional and economic reasons for downward wage rigidity regarding three occupational skill groups. Based on a survey of 801 firms in Germany and an econometric analysis, we find strong support for explanations based on the effects of labour union contracts and efficiency wages that differ between skill groups. Survey respondents...

We study optimal contest design in situations where the designer can reward high performance agents with positive prizes and punish low performance agents with negative prizes. We link the optimal prize structure to the curvature of distribution of abilities in the population. In particular, we identify conditions under which, even if punishment is costly, punishing the bottom is more effective...

Fixed-term contract employment has increasingly replaced regular open-ended employment as the predominant form of employment notably in developing countries. Guided by factory-level evidence showing nuanced patterns of co-movements of regular and contract wages, we propose a two-tiered task based model with self-enforcing contracts in which firms allocate complex tasks to long term employees at...

Flexibility vs. Rigidity: Does Spain have the worst of both Worlds? In this paper we study the structure of labor market flows in Spain and compare them with France and the US. We characterize a number of empirical regularities and stylized facts. One striking result is that the job finding rate is slightly higher than in France, while the jon loss rate is much higher, putting Spain half-way be...

We consider a market where there is an agency relationship between the providers of a service or agents and their clients. Agents can choose to work alone or to have a sharing agreement with other agents. Sharing agreements create value by facilitating better matches between clients and agents, but they worsen incentives because of free riding. We show that in the context of a one shot game, th...