Titel
The Nexus between Contract Duration and the Use of Formal and Informal Incentive Pay
Autor*in
Dominique Demougin
Department of Economics, University of Liverpool Management School, University of Liverpool
Abstract
We investigate a firm's choice of formal and informal effort incentives in a repeated game setting with undistorted signaling and liquidity‐constrained agents. The model allows for a simple geometric representation of credibility and incentive‐feasibility effects on optimal contract design. If credibility constitutes a binding constraint, explicit, i.e. enforceable, performance pay and discretionary salary promises are unambiguous substitutes and higher employee performance is associated with lower‐powered bonus pay. Using personnel data from an insurance company, we show that the model's predictions regarding the mediating role of expected contract duration on these relationships are consistent with remuneration practices.
Objekt-Typ
Sprache
Englisch [eng]
Persistent identifier
phaidra.univie.ac.at/o:1094744
Erschienen in
Titel
LABOUR
Band
33
Ausgabe
3
ISSN
1121-7081
Erscheinungsdatum
2019
Seitenanfang
351
Seitenende
370
Publication
Wiley
Erscheinungsdatum
2019
Zugänglichkeit
Rechteangabe
© 2019 The Authors
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