Using new establishment-by-occupation microdata, we show that the use of discretionary wage setting significantly expanded in 1970s and 1980s. Increasingly, wages for blue-collar workers were not standardized by job title or seniority but instead subject to managerial discretion. When establishments abandoned pay rates, fell, particularly lowest-paid a those previously paid above market rates. ...

We design three field experiments to estimate how workers' social preferences toward their employer motivates work effort. vary the pay rates offered workers, return employer, and generosity demonstrated via unexpected gifts. Workers exert effort even without private incentives, but is insensitive employer. This consistent with “warm glow” not pure altruism. The gifts have no effect on producti...

This note demonstrates how performance measure congruity and noise determine an agency’s total surplus within an linear agency framework with multiple tasks. It provides a decomposition of agency costs, leading back to a congruity index previously proposed in the literature. In addition, it generalizes this index to a more general cost function, thereby highlighting the context specificity of t...

We have used a murine model of organ-specific autoimmunity to characterize therapeutic modalities capable of down-regulating the cellular limb of the autoimmune response. Murine interstitial nephritis is an autoimmune disease mediated by tubular antigen-specific CD8+ nephritogenic effector T cells which are delayed-type hypersensitivity (DTH) reactive and cytotoxic to renal epithelial cells. Pr...

Instead of relying on accounting principles and illustrative accounting examples, this paper examines the rationale for ESO expensing from an economics perspective and has the following findings. In principle, while ESO expensing is justified under ESOs’ expense-postponing function, it is not under the employee-stimulating function. In practice, ESOs’ risk-sharing function poses a fundamental d...

Optimal incentive mechanisms may require that agents be rewarded differentially even when they are completely identical and induced to act the same. We demonstrate this point using a simple incentive model where agents’ decisions about effort exertion are mapped into a probability that the project will succeed. We show that full discrimination across all agents is required if and only if the te...

We consider partnerships among risk-averse professionals endowed with (i) a risky and personally-costly production technology and (ii) a personallycostly monitoring technology providing contractible noisy signals about partners’productive e¤orts. Partners shirk both production and monitoring tasks because e¤orts are unobservable. We charaterize optimal partnership size, pro…t shares and incenti...

Variable pay creates a link between pay and performance but may also help firms in attracting more productive employees. Our experiment investigates the impact of performance pay on both incentives and sorting and analyzes the influence of repeated interactions between firms and employees on these effects. We show that (i) the opportunity to switch from a fixed wage to variable pay scheme incre...

Modern societies are characterized by competing organizations that rely predominantly on incentive schemes to align the behavior of their members with the organizations’ objectives. This study contributes to explaining why in so many cases incentive schemes have gradually crowded out cooperation as an organization device. Our explanation does not draw on free-riding, the obvious Achilles’ heel ...

We consider partnerships among risk-averse professionals endowed with (i) a risky and personally-costly production technology and (ii) a personally-costly monitoring technology providing contractible noisy signals about partners’ productive efforts. Partners shirk both production and monitoring tasks because efforts are unobservable. We characterize optimal partnership size, profit shares and i...