Altruism and Relational Incentives in the Workplace

Robert Dur and Jan Tichem ()
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Jan Tichem: Erasmus University Rotterdam

No 7363, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper studies how altruism between managers and employees affects relational incentive contracts. To this end we develop a simple dynamic principal-agent model where both players may have feelings of altruism or spite toward each other. The con- tract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that altruism undermines the credibility of a threat of dis- missal but strengthens the credibility of a bonus. Among others, these two mechanisms imply that higher altruism sometimes leads to higher bonuses, while lower altruism may increase productivity and players utility in equilibrium.

Keywords: Nash bargaining; spite; subjective performance evaluation; efficiency wages; incentives; relational contracts; altruism (search for similar items in EconPapers)
JEL-codes: D23 J33 M52 M55 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013-04
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-lab, nep-soc and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Journal of Economics and Management Strategy, 2015, 24(3), 485-500

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Journal Article: Altruism and Relational Incentives in the Workplace (2015)
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