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Rewarding Idleness

Andrea Canidio and Thomas Gall

No 2012_14, CEU Working Papers from Department of Economics, Central European University

Abstract: Market wages reflect expected productivity by using signals of past performance and past experience. These signals are generated at least partially on the job and create incentives for agents to choose high-profile and highly visible tasks. If agents have private information about the profitability of different tasks, firms may wish to prevent over- investment in visible tasks by increasing their opportunity costs. Firms can do so, for instance, by using employee perks. Heterogeneity in employee types induces substantial diversity in organizational and contractual choices, particularly regarding the extent to which conspicuous activities are tolerated or encouraged, the use of employee perks, and contingent wages

Date: 2012-09-12, Revised 2012-09-12
New Economics Papers: this item is included in nep-bec, nep-cta and nep-hrm
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