Reciprocity and Incentive Pay in the Workplace

Robert Dur, Arjan Non, Hein Roelfsema

Research output: Working paperProfessional

Abstract

We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker's effort nor manager's attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2008

Publication series

NameDiscussion paper TI
No.08-080/1

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Incentive pay
Work place
Workers
Incentives
Double moral hazard
Incentive contracts
Financial incentives
Bonus
Prediction
Multiple agents
Panel data
Managers
Socio-economics

Cite this

Dur, R., Non, A., & Roelfsema, H. (2008). Reciprocity and Incentive Pay in the Workplace. (Discussion paper TI; No. 08-080/1). Amsterdam: Tinbergen Instituut.
Dur, Robert ; Non, Arjan ; Roelfsema, Hein. / Reciprocity and Incentive Pay in the Workplace. Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; 08-080/1).
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Dur, R, Non, A & Roelfsema, H 2008 'Reciprocity and Incentive Pay in the Workplace' Discussion paper TI, no. 08-080/1, Tinbergen Instituut, Amsterdam.

Reciprocity and Incentive Pay in the Workplace. / Dur, Robert; Non, Arjan; Roelfsema, Hein.

Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; No. 08-080/1).

Research output: Working paperProfessional

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Dur R, Non A, Roelfsema H. Reciprocity and Incentive Pay in the Workplace. Amsterdam: Tinbergen Instituut. 2008. (Discussion paper TI; 08-080/1).