Conference Management, Happiness and Relational Goods

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Reciprocity and Incentive Pay in the Workplace

Robert Dur, Arjan Non, Hein Roelfsema

Last modified: 2009-05-13

Abstract


We study optimal incentive contracts for workers who are reciprocal to management attention. When neither worker’s e

 

ffort nor manager’s attention can be contracted, a double moral-hazard problem arises, implying that reciprocal workers should be given weak financial incentives. In a multiple-agent setting, this problem can be resolved using promotion incentives. We test these predictions using German Socio-Economic Panel data. We find that workers who are more reciprocal are significantly more likely to receive promotion incentives, while there is no such relation for individual bonus pay.


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