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Pay for Performance and Beyond

Bengt Holmström

American Economic Review, 2017, vol. 107, issue 7, 1753-77

Abstract: Incentives are often associated with narrow financial rewards such as bonuses or executive stock options. But in general such rewards are just a small part of the design of incentives. Properly designed incentive systems have to take into account the full portfolio of activities that the agent can engage in, the array of instruments, many nonfinancial, that are available to influence individuals and consider the factors that motivate them in different settings. Thinking about incentives as a system of interacting instruments and influences has been a major advance in the economics of incentives in recent years. In this lecture I will describe the path from pay for performance to the broader view of incentive systems.

JEL-codes: D21 D82 D86 J33 J41 M12 M52 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.107.7.1753
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Handle: RePEc:aea:aecrev:v:107:y:2017:i:7:p:1753-77