Arbeitspapier
Social Relations and Relational Incentives
This paper studies how social relationships between managers and employees affect 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 contract may contain two types of incentives for the agent to work hard: a bonus and a threat of dismissal. We find that good social relationships undermine the credibility of a threat of dismissal but strengthen the credibility of a bonus. Among others, these two mechanisms imply that better social relationships sometimes lead to higher bonuses, while worse social relationships may increase productivity and players' utility in equilibrium.
- Language
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Englisch
- Bibliographic citation
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Series: Tinbergen Institute Discussion Paper ; No. 12-054/1
- Classification
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Wirtschaft
Organizational Behavior; Transaction Costs; Property Rights
Compensation Packages; Payment Methods
Personnel Economics: Compensation and Compensation Methods and Their Effects
Personnel Economics: Labor Contracting Devices
- Subject
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Altruism
spite
social relations
incentives
relational contracts
efficiency wages
subjective performance evaluation
Nash bargaining
Arbeitsbeziehungen
Soziale Beziehungen
Leistungsanreiz
Unvollständiger Vertrag
Prinzipal-Agent-Theorie
Dynamisches Spiel
Verhandlungstheorie
Theorie
- Event
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Geistige Schöpfung
- (who)
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Dur, Robert
Tichem, Jan
- Event
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Veröffentlichung
- (who)
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Tinbergen Institute
- (where)
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Amsterdam and Rotterdam
- (when)
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2012
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
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Object type
- Arbeitspapier
Associated
- Dur, Robert
- Tichem, Jan
- Tinbergen Institute
Time of origin
- 2012