Subjective Evaluations: Discretionary Bonuses and Feedback Credibility

William Fuchs

No 7758, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We provide a new rationale for the use of discretionary bonuses. In a setting with unknown match qualities between a worker and a firm and subjective evaluations by the principal, bonuses are useful in order to make the feedback from the firm to the workers credible. This way workers in good matches are less inclined to accept outside offers.

Keywords: feedback; discretionary bonuses; signalling (search for similar items in EconPapers)
JEL-codes: D82 D83 D86 M5 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2013-11
New Economics Papers: this item is included in nep-bec, nep-cta, nep-hrm and nep-mic
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Published - published in: American Economic Journal: Microeconomics, 2015, 7 (1), 99–108

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Journal Article: Subjective Evaluations: Discretionary Bonuses and Feedback Credibility (2015)
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