A bonus given: noise, effort and efficiency in a flat hierarchy

John Sessions () and John Skatun ()
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John Sessions: Newcastle University
John Skatun: University of Aberdeen

Economics Bulletin, 2019, vol. 39, issue 4, 2527-2532

Abstract: We show that bonuses are efficient in terms of effort exertion and greater in noisier environments. This could explain the prevalence of bonuses in the financial sector, which is characterised by flat hierarchies and inherently noisy environments. Policies to restrict bonuses should be implemented cautiously since they may imply undesirable efficiency effects.

Keywords: Bonuses.; Banks (search for similar items in EconPapers)
JEL-codes: J3 (search for similar items in EconPapers)
Date: 2019-11-12
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Citations: View citations in EconPapers (1)

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