Incentives and status

Oindrila Dey and Swapnendu Banerjee (Bandyopadhyay)

MPRA Paper from University Library of Munich, Germany

Abstract: This paper characterizes the structure of monetary incentives in an organization with varying differences in employee status. With the help of a moral hazard framework with limited liability we show that for agents with lower outside option increased status leads to lower incentive pay whereas exactly the opposite happens for agents with higher outside option. For agents with very high status such that the limited liability doesn’t bind, an exogenous increase in status level leads to an unambiguous decrease in optimal incentive payment.

Keywords: Status; incentives; motivation; moral hazard; optimal contract (search for similar items in EconPapers)
JEL-codes: L1 L14 (search for similar items in EconPapers)
Date: 2014-09-01
New Economics Papers: this item is included in nep-cta, nep-hrm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:58399

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